trade information package and water industry outlook - the united arab emirates (uae) 2011

TRADE INFORMATION PACKET and

WATER REPORT

The United Arab Emirates (UAE)

San Diego, March 2011

Prepared by:

Andreas Fried

The Author Always Appreciate Connecting on LinkedIn:

http://www.linkedin.com/in/andreasfried

http://www.linkedin.com/in/andreasfried

of 86 ©2011 The World Trade Center San Diego, all rights reserved.

General Provision

This report was conducted by the World Trade Center San Diego (WTCSD). The scope of this report is to

provide information about the United Arab Emirates (UAE). The report will not be, and should not be,

considered as an opinion regarding a recommendation for, or the reasonableness of any specific

business action. No representations or warranties are provided with respect to the results obtained

from use of the analysis or surveys of this report. In no event shall the WTCSD be liable for

consequential, special, direct, or indirect damages arising out of use of this material.

To the best of our knowledge and belief, the statements contained in this report are true and correct.

Information, estimates and opinions provided to us and contained in the report were obtained from the

sources cited, and to the extent analyzed by us are believed to be true and correct. However, no

representation, liability or warranty for the accuracy of such items is assumed by or imposed on WTCSD.

Opinions in this report are the author’s opinion, and are not the official opinion of WTCSD.


Table of Contents

General Provision .......................................................................................................................................... 2

Introduction .................................................................................................................................................. 6

Why the UAE? ............................................................................................................................................... 7

Quick Facts .................................................................................................................................................... 8

Location ......................................................................................................................................................... 9

The Emirates ............................................................................................................................................. 9

Geography and Climate .............................................................................................................................. 10

In numbers .............................................................................................................................................. 10

Natural Resources ....................................................................................................................................... 11

Oil and Gas .............................................................................................................................................. 11

Water ...................................................................................................................................................... 11

History ......................................................................................................................................................... 12

20th Century ............................................................................................................................................ 12

Demographic ............................................................................................................................................... 13

In numbers .............................................................................................................................................. 13

Religion ................................................................................................................................................... 14

Education .................................................................................................................................................... 15

Politics and Legislation ................................................................................................................................ 16

Political System ....................................................................................................................................... 16

The Emirs................................................................................................................................................. 17

Transition of Power ................................................................................................................................. 18

Legislation ............................................................................................................................................... 19

International Affiliation ........................................................................................................................... 21

International Relations, Security, and Defense .......................................................................................... 23

Immigration............................................................................................................................................. 23

Defense ................................................................................................................................................... 23

International Relations ........................................................................................................................... 25

Infrastructure .............................................................................................................................................. 26

Transportation ........................................................................................................................................ 26

Telecom ................................................................................................................................................... 27


Energy ..................................................................................................................................................... 27

Economic Environment ............................................................................................................................... 29

Overview ................................................................................................................................................. 29

GDP development ................................................................................................................................... 30

Government Finances ............................................................................................................................. 31

Exchange Rate ......................................................................................................................................... 32

Interest Rates .......................................................................................................................................... 33

Financing ................................................................................................................................................. 33

Payments................................................................................................................................................. 35

Inflation ................................................................................................................................................... 35

Labor Market........................................................................................................................................... 36

Taxation................................................................................................................................................... 37

Investment Climate ................................................................................................................................. 37

Trade ........................................................................................................................................................... 40

U.S. Trade ................................................................................................................................................ 41

California Trade ....................................................................................................................................... 42

Services ................................................................................................................................................... 44

Trading With the UAE ................................................................................................................................. 45

Culture .................................................................................................................................................... 45

Business Customs .................................................................................................................................... 45

Business Travels ...................................................................................................................................... 48

Import and Export Procedures ................................................................................................................ 49

Standards ................................................................................................................................................ 50

Intellectual Property Rights .................................................................................................................... 50

Sales & Marketing ................................................................................................................................... 51

Organizations and Information Sources ................................................................................................. 52

Fairs and Trade Shows ............................................................................................................................ 54

Market Entry Strategies .............................................................................................................................. 55

UAE Water Industry .................................................................................................................................... 57

Quick Facts .............................................................................................................................................. 58

Water in the UAE .................................................................................................................................... 59

Groundwater ........................................................................................................................................... 60


Current Financial Situation ..................................................................................................................... 61

Government & Privatization ................................................................................................................... 62

Water Consumption ................................................................................................................................ 62

UAE Water Industry ................................................................................................................................ 63

Desalinization .......................................................................................................................................... 63

Wastewater ............................................................................................................................................. 64

Agriculture .............................................................................................................................................. 66

Evaporation and Recharge ...................................................................................................................... 67

Current Projects ...................................................................................................................................... 69

Government Water Sector Organizations .............................................................................................. 75

Government Influence ............................................................................................................................ 79

UAE Water Companies ............................................................................................................................ 80

U.S. Companies Engaged in the UAE Water Sector ................................................................................ 81

Foreign Companies Engaged in the UAE Water Sector .......................................................................... 82

Further Contacts and Information .......................................................................................................... 83

Resources .................................................................................................................................................... 85


Introduction

This report is an introduction to the United Arab Emirates (UAE) and its water industry. The report

contains country-, trade-, and cultural facts, and an overview of the current political and economical

climate in the UAE. The report is concluded with a study of the UAE water industry. The UAE, situated in

the Persian Gulf, is a young country that came into being 1971, when the UK gave up its protectorate of

the region. Seven emirates: Abu Dhabi, Ajman, Al Fujairah, Sharjah, Dubai, Ras al Khaimah, and Umm Al

Quwain - merged to form the United Arab Emirates. Abu Dhabi, with a population of 900,000 people, is

the capital. The emirate of Abu Dhabi covers almost 90% of the UAE and contributes almost 60% of GDP.

Dubai is the biggest and most well-known city with a metro population of 3.4 million. The four smallest

emirates have a total population of just 784,000 people. Therefore, this report will mostly focus on

Dubai and Abu Dhabi. Whilst Abu Dhabi has resurfaced from the financial crisis due to rising oil prices,

Dubai, and especially its property and estate industry, was hard hit by the financial crisis. Several

ambitious projects in Dubai have been under financial pressure.

The red, green, white, and black UAE flag. Each of the four colors is representative of the Arabic world. Green

stands for fertility, white for peace and neutrality, black for the oil wealth of the country and red represents the

former flags of the Kharijite Muslims. All the four colors in the UAE flag together stand for Arabian unity.

The Peregrine Falcon is a national symbol for the UAE, and part of the country’s coat of arms. The text is ‘United

Arab Emirates’ in Arabic (Kufic) calligraphic form.


Why the UAE?

The UAE is a wealthy nation with a lucrative and dynamic market that has long been recognized as the

commercial and business hub of the Gulf and an entry market to the Middle East’s 800 million people

and $5.6 trillion market. A member of the WTO since 1996, the UAE supports open trade and has stable

trade relations with countries throughout the world.

More than 28,000 Americans live in the UAE.

The UAE is the United States’ largest export market in the Arab World, with $12.2 billion

purchased of goods and services from the U.S. in 2009.

There are over 700 U.S. companies stationed in the UAE.

Transparency International ranks the UAE in the top quarter of the world’s least corrupt

countries - and the least corrupt in the Arab world.

The UAE's per capita GDP is not far below those of leading West European nations.

The UAE hold the 7th largest per-country oil reserves.

The Burj Khalifa at 2,717 ft is the tallest building in the world. A part of the $20 bn. reconstruction of downtown

Dubai, it is a testament to the bold ambitions of the emirate.

The same Dubai area in 1990 and 2003; in just 13 years the development has been enormous.


Quick Facts

* shows GDP on a purchasing power parity basis.

Name: United Arab Emirates

Population: 5 million

Capital: Abu Dhabi

Size: 83,600 sq km (97% desert); slightly bigger than Maine.

Language: Arabic; English is widely understood.

Government: Federation of seven emirates.

Head of State:

The Supreme Council, comprising the seven emirs, elects the president

from among its members. On the death of his father in November 2004,

Sheikh Khalifa bin Zayed al-Nahyan became ruler of Abu Dhabi and was

elected president of the UAE.

Government:

The Council of Ministers (cabinet), led by the prime minister, is appointed

by the Supreme Council of Rulers. Each state is represented by at least one

minister, with senior posts allocated to the larger emirates. The Council of

Ministers initiates legislation for ratification by the Supreme Council of

Rulers, which is also a policymaking body and meets formally about once a

year. The latest cabinet reshuffle was in February 2008.

Legal system:Based on a dual system of sharia and civil courts;

has not accepted compulsory ICJ jurisdiction.

Religon: 96 % Islam (majority Sunni, around 16% Shia).

Currency:UAE dirham (Dh) = 100 fils. The dirham is pegged to the US dollar at a rate

of Dh3.67:US$1.

GDP: $200 billions (2010 est)

GDP/Capita (PPP)*: $40,200 (2010 est)

Internet domain: .ae

Time: 4 hours ahead of GMT (9.00 am in CA is 10.00 pm in UAE)

Measures: Metric system

Public Holidays:

Islamic holidays (dates are approximate):

Mawlid al-Nabi (the birthday of the Prophet, February 15th 2011);

Eid al-Fitr (end of Ramadan, August 30th 2011);

Eid al-Adha (Feast of the Sacrifice, November 6th 2011);

Al Hijra (Islamic New Year, November 26th 2011)

Fixed secular holidays:

January 1st (New Year’s Day);

August 6th (Accession of Sheikh Zayed, the late ruler of Abu Dhabi— -

Abu Dhabi only);

December 2nd (UAE National Day)


Location

The UAE is located at the north tip of the Arabian Peninsula. It borders to Saudi Arabia in the south,

Oman in the east, Qatar in the west. It has maritime boarders with Iran, Bahrain, Kuwait, and Iraq. Abu

Dhabi and Dubai have large ports and global-reaching airports.

Topographic map of the UAE. The country is very flat except for the north eastern Al-Hajar al-Gharbi Mountains.

The Emirates The UAE is made up of seven emirates: Dubai (34% of population), Abu Dhabi (33%), Sharjah (19%),

Ajman (5%), Ras al-Khaimah (5%), Fujairah (3%), and Umm al-Qaiwain (1%).


Geography and Climate

The first thing that will hit a UAE visitor is the heat. The coastal plain has a hot and dry climate and

numerous salt marshes; farther from the coast a dry, barren desert-like steppe takes over. Only the

eastern edge has greater heights. Due to the dry climate the vegetation is very sparse and confined to

the oases and dry river valleys. Average summer (July-August) high temperature is 118 °F and average

winter (January-February) low is 50-57 °F. The average annual coastland rainfall is 4.7 in.

A yearly climate overview for Dubai.

The weather chart during much of the year shows a ridge of high pressure extending southwards into

central Saudi Arabia with lower pressure over the eastern Gulf. Prevailing light to moderate north-

westerly winds, known by their Arabic name shamal, meaning ‘north’, are associated with mid-latitude

disturbances. Along the western coastal plain, sea breezes tend to dominate with light south-south-

easterlies at night being replaced by moderate north-westerly during daytime. This pattern changes on

the east coast where the proximity of the mountains results in gusty and less predictable wind shifts. A

good strong blast of northerly shamal is usually preceded in the UAE by strong southerly winds, raising

desert sands and reducing visibility. The shift to northerly winds may be quite sudden and can be

accompanied by rain, thunder storms, or dust-storms.1

In numbers The most vital geographic data:

1 https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html

Data UAE US

Land Use 3.56% 0.97%

Arable land 0.77% 18%

Permanent crops 2.27% 0.21%

Other 96.6% 81.78%

Irrigated land (sq km) 720 223,850

Water 76.3 77.8

Total renewable water resources (cu km) 0.2 (1997) 3069 (1985)

Freshwater withdrawal (cu km/yr) 2.3 477

Per capita (cu m/yr) 511 (2000) 1,600

Domestic 23% 13%

Industrial 9% 46%

Agricultural 68% 41%

https://www.cia.gov/library/publications/the-world-factbook/geos/ae.html


Natural Resources

The UAE is more than most countries dependent on its oil reserves. The reserves rank 7th in the world:

Reserves, including crude. * Calculated as reserves / annual production.2

Oil and Gas Oil and gas are the most important natural resources. The federation has proven reserves of around

98bn barrels of oil (the fifth-largest in OPEC), which at current production rates would last for over 100

years. Natural gas reserves are estimated at 213trn cu ft (the fifth-largest in the world), although much

of this is sour gas, which must be cleaned of sulfur before use. In addition, the country has commercial

quantities of several important minerals including copper in Fujairah and Ras al-Khaimah, magnesium in

Abu Dhabi and manganese in all the northern emirates. Recent oil production and price development:

Water Water shortages are an ongoing concern. The UAE has very limited rainfall or groundwater but has one

of the highest levels of consumption per capita in the world (550 liters per person per day) in part a

reflection of the subsidized prices that Emiratis pay. The authorities, therefore, have invested heavily in

building and upgrading desalination plants and wastewater processing capacity. Peak water demand in

Abu Dhabi was estimated to be around 690m gallons/day (gal/d) in 2008, according to the Abu Dhabi

Water and Electricity Company. In Dubai, the Dubai Electricity and Water Authority’s peak demand for

desalinated water stood at 239m gal/d in 2007, compared with a production capacity of 278m gal/d.

(Groundwater wells in Dubai can only provide about 36m gal/d.)3

2 PennWell Corporation, Oil & Gas Journal, Vol. 105.48 (December 24, 2007)

3 Economist Intelligence Unit, United Arab Emirates Country Profile

Country Reserves Production Reserve life*

10bbl 10bbl/d years

Saudi Arabia 467 9.7 127.5

Iraq 180 3.5 142

Canada 179 2.1 188

Iran 138 4 95

Kuwait 104 2.6 110

Venezuela 99 2.7 100

United Arab Emirates 98 2.9 93

Russia 60 9.9 17

Kazakhstan 47 1.4 93

Libya 41 1.7 66

Nigeria 36 2.4 41

United States 21 7.5 8

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Crude oil production

(m barrels/day) 2,286.70 2,250.00 2,270.00 2,276.70 2,283.30 2,296.70 2,330.00 n/a

Prices, Dubai Spot

(US$/barrel) 44.6 58.9 68.1 75.5 75.9 78 74 90

2009 2010


History

The UAE’s history is rooted in trade and tied to Islam, which came to the region in AD 630. Its location

between Europe and the Far East attracted merchants from India and China. While Europeans sought

control of the coasts, inland, the ancestors of the Bedouin made the sandy deserts of Abu Dhabi and

Dubai their home. The town of Abu Dhabi became an important center. In the 19th century, the British

signed a series of agreements with the individual emirates that resulted in the area becoming known as

“The Trucial States.” They agreed not to dispose of any territory except to the United Kingdom and not

to enter into relationships with any foreign government other than the United Kingdom without its

consent. In return, the British promised to protect the coast from all aggression by sea and to help in

case of land attack.

The pearling industry thrived in 19th and early 20th centuries, providing income and employment to

the people of the Gulf. Many inhabitants were semi-nomadic, pearling in the summer and tending date

gardens in the winter. But the economic depression in the late 1920s and early 1930s, coupled with the

Japanese invention of the cultured pearl, irreparably damaged the industry. Most UAE nationals are

descended from two tribal groupings, the Qawasim and the Bani

Yas, which emerged as leading powers in the region in the 18th

century. The Qawasim, mainly land and sea traders, held sway over

what is today Ras al-Khaimah and Sharjah, whereas the Bani Yas,

who were more agricultural and pastoral, lived in what is now Abu

Dhabi and Dubai.

The Fort of Fujairah

20th Century Sheikh Rashid bin Saeed Al Maktoum (1912-1990), de facto Ruler of Dubai from 1939 to 1990,

developed shipping to replace pearling revenues. In the early 1930s the first oil company teams

conducted geological surveys. In 1962, the first cargo of crude was exported from Abu Dhabi. Massive

programs of construction of schools, housing, hospitals and roads were undertaken. There was

substantial immigration from Arab tribes in southern Iran during the late 19th and early 20th centuries,

particularly to Dubai.

At the beginning of 1968, when the British announced their intention to withdraw from the Arabian

Gulf, Sheikh Zayed bin Sultan Al Nahyan (1918-2004), ruler of Abu Dhabi, acted rapidly to establish

closer ties with the emirates. With Sheikh Rashid of Dubai, Sheikh Zayed called for a federation that

would include not only the seven Emirates that together made up the Trucial States, but also Qatar and

Bahrain. Agreement was reached between the rulers of six of the Emirates (Abu Dhabi, Dubai, Sharjah,

Umm al-Qaiwain, Fujairah and Ajman), and the Federation to be known as the United Arab Emirates was

formally established on 2 December 1971. The seventh Emirate, Ra’s al-Khaimah, acceded to the new

Federation the following year.4

4 http://www.uae-embassy.org/uae/history and http://www.eiu.com/public/

http://www.uae-embassy.org/uae/history

http://www.eiu.com/public/


Demographic

Demographics are a tricky thing in the UAE. Due to the large inflow of immigrants, official numbers are

somewhat unreliable. In 2010, the UAE's population was estimated at 4,975,593, of which fewer than

20% were UAE nationals or Emiratis, while the majority of the population was expatriates. The country's

net migration rate stands at 21.71, the world’s highest.

23% of the population is non-Emirati Arabs and Iranians and the majority of the population, about

50%, is from South Asia. Approximately 1.75 million Indian nationals reside in the UAE, making them the

single largest expatriate community in the country and a majority too. Other major groups include 1.25

million Pakistanis, and 600,000 Bangladeshis. Those from other parts of Asia (including the Philippines,

Iran or Sri Lanka) comprised up to 1 million people. The rest of the population was from other Arab

states.

Thousands of Palestinians, who came as either political refugees or temporary employment, live in the

UAE. There is a sizable population of people from Egypt, Somalia and Sudan who migrated to the UAE

before its formation. After the formation of the UAE, rulers have been wary of too large an inflow of

Arab immigrants, as Arab immigrants would be more prone to demand civil rights than non-Arabic

expats. The UAE has attracted a small number of expatriates from developed countries in Europe, North

America, Asia, and Oceania. More than 100,000 British nationals live in the country. The population of

the UAE has a skewed sex distribution consisting of more than twice as many males as females. The 15–

65 age group has a male/female sex ratio of 2.743. The UAE's gender imbalance is only surpassed by

other Arab countries in the Persian Gulf region. About 88% of the population of the United Arab

Emirates is urban.

In numbers The key demographics:

* 73.9% of the population in the 15-64 age group is non-national (2010 est.) ** Expected years.

Data UAEWorld Ranking

(UAE)US

Population 5,0 m 114 301,2 m

Population Growth 3.56% 4 0.97%

Birth Rate (births/1,000 population) 15.98 129 13.83

Urban Population 88% 82%

Migration (migrant(s)/1,000 population) 21.71 1 4.25

Sex Ratio (male/female) 2.2 0.97

Life Span 76.3 70 77.8

Age Structure

0-14 20.4% 20.2%

15-64 78.7%* 67.0%

65+ 0.90% 12.8%

Religon

Sunni Muslims 80%

Shia Muslims 16%

Other (Christian, Hindu) 4%

Education

Literacy 89.0% 99%

Avarage Years of Schooling (adults) 12** 12

Education Spending (% GDP) 2.3% 5.7%


Religion 96% of the permanent population of the UAE is Muslim. The majority is Sunni and about 16% are Shia.

Sunni Islam is the largest branch of Islam. Sunni Islam is referred to as the orthodox version of the

religion. The word "Sunni" comes from the term Sunnah, which refers to the sayings and actions of

Muhammad that are recorded in hadiths. The foreign population includes Sunni and Shia Muslims,

Hindus, and Christians.

The UAE’s constitution declares that Islam is the official religion. Muslims are expressly prohibited

from converting to other religions, but conversion by non-Muslims to Islam is viewed favorably. During

Ramadan, all residents and visitors are required to abide by restrictions imposed on Muslims. Islamic

studies are mandatory for citizen children attending public schools and for Muslim children attending

private schools. Religious instruction in non-Muslim religions is not permitted in public schools.

According to the U.S. Department of State, non-Muslim religious leaders within the UAE and outside

the country refer to it as one of the most liberal and broad-minded countries in the region in terms of

governmental and societal attitudes toward allowing the unfettered practice of other faiths. The UAE

government generally follows a policy of tolerance toward non-Muslim religions and, in practice, does

not interfere very much with their religious activities. However, the government does prohibit non-

Muslims from proselytizing or distributing religious literature under penalty of criminal prosecution,

imprisonment, or deportation, deeming such behavior to be offensive to Islam.5

5 http://www.globalsecurity.org/military/world/gulf/uae-religion.htm

http://www.globalsecurity.org/military/world/gulf/uae-religion.htm


Education

Education has increasingly been a priority in the UAE, with a particular focus on providing Emirati

citizens with the skills that will enable them to participate in the private sector. Education spending was

US$4.6bn in 2008 and is generally by far the largest item in the federal budget. About half the schools

are government-run and, although expatriates can enroll, state education is free only for citizens. Most

children of expatriates study in private schools that use the language and curricula of their home

countries. The UNESCO put the adult literacy rate at 89% in 2007, up sharply from 77% in 2003 and 43%

in 1975. As a result of high funding, the UAE has one of the lowest pupil/teacher ratios in the world,

although the quality of education is variable. Most teachers at all levels of the educational system are

expatriates. The UAE has so far attracted 20 international partners to open local campuses, most

notably the Sorbonne and the New York University.6

List of universities in the UAE.

6 Economist Intelligence Unit, United Arab Emirates Country Profile

Abu Dhabi Men's College Fujairah Women's College

Abu Dhabi Women's College Gulf Medical College, now Gulf Medical University

Abu Dhabi University Hamdan Bin Mohammed e-University

Ajman University of Science and Technology Heriot-Watt University Dubai

Al Ain Men's College Higher Colleges of Technology

Al Ain Women's College Ittihad University

Al Ghurair University INSEAD Business School - Abudhabi

American University in the Emirates Khalifa University of Science, Technology and Research

American University of Asia London Business School

American University in Dubai NYU Abu Dhabi

American University of Sharjah Ras Al Khaimah Men's College

Birla Institute of Technology & Science, Pilani - Dubai Ras Al Khaimah Women's College

Birla Institute of Technology International Centre, Ras Al Khaimah RAK Medical & Health Sciences University - College of Dental Sciences

British University in Dubai - BUiD Rochester Institute of Technology

Canadian University Of Dubai Sharjah Men's College

Cass Business School Sharjah Women's College

CERT (Centre of Excellence for Applied Research and Training) Skyline College Sharjah

Dubai Medical College for Girls Syracuse University

Dubai Men's College United Arab Emirates University

Dubai Women's College University of Sharjah

Etisalat University College University of Wollongong in Dubai

Fujairah College Zayed University

Fujairah Men's College

University


Politics and Legislation

Political System Political parties are not allowed in the UAE. Politics of the United Arab Emirates takes place in a

framework of a federal, presidential, elected monarchy. Administratively, the UAE is a federation of

seven emirates, each with its own ruler. The pace of local government reform in each emirate is set

primarily by the ruler. Under the provisional constitution of 1971, each emirate reserves considerable

powers, including control over mineral rights (notably oil) and revenues. In this milieu, federal powers

have developed slowly as each Emirate already had its own existing institutions of government prior to

the country’s official foundation. The constitution separates powers into executive, legislative, and

judicial branches (both Emirate and Federal level).7

Current Government

The current government consists of the following key persons (selection):

Position Name

President: Sheikh Khalifa bin Zayed al-Nahyan (Abu Dhabi)

Prime minister & vice-president: Mohammed bin Rashid al-Maktoum (Dubai)

Deputy prime minister & interior minister: Saif bin Zayed al-Nahyan

Deputy prime minister: Mansour bin Zayed al-Nahyan

Federal National Council affairs: Mohammed Anwar Gargash

Foreign affairs: Mohammed Anwar Gargash and Abdullah bin Zayed al-Nahyan

Defense: Mohammed bin Rashid al-Maktoum

Economy Sultan: bin Said al-Mansouri

Energy: Mohammed bin Dhaen al-Hamli

Environment & water: Rashid Ahmed bin Fahad

Finance: Hamdan bin Rashid al-Maktoum

Foreign trade: Lubna al-Qasimi

Higher education & scientific research: Nahyan bin Mubarak al-Nahyan

Justice: Hadef bin Juaan al-Dhaheri

Public works & housing: Hamdan bin Mubarak al-Nahyan8

7 http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ae0052)

8 http://www.state.gov/r/pa/ei/bgn/5444.htm#gov

http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ae0052)

http://www.state.gov/r/pa/ei/bgn/5444.htm#gov


The Emirs The seven emirates are run by royal emirs, also referred to as Sheikhs (Sheikh is a title for a religious

scholar which is used in Muslim countries), whilst emir is the correct title of nobility. An introduction to

Muslim names; the first part (Mohammed) is the given name (as a Muslim you should choose a given

name with righteous meaning), the second part (bin Rashid) means ‘son of’ Rashid, and the third part (Al

Maktoum) is the surname, based on occupation, geographic home area, or descent (tribe, family).

Dubai – Al Maktoum

Al Maktoum is the family name of the ruling dynasty of the emirate of Dubai. The Al Maktoum family is a

branch of the Bani Yas tribe (a lineage the family shares with the Al Nahyan dynasty of Abu Dhabi), a

powerful Bedouin clan from the interior. The Al Maktoum family descends from the Al Bu Falasah (now

known as Al-Falasi) section of the Bani Yas, a highly respected and authoritative tribal federation that

was the dominant power throughout most of what is now the United Arab Emirates. In 1833, about 800

members of the Bani Yas tribe, under the leadership of Maktoum bin Butti, took over the emirate of

Dubai and established the Al Maktoum dynasty in the emirate.

Sheikh Mohammed bin Rashid Al Maktoum (Sheikh Mohammed), born 1949, is the Prime Minister and

Vice President of the UAE, and absolute monarch of Dubai. Sheikh Mohammed has 21 officially

acknowledged children. Al Maktoum, his sons, and his daughters are known to be avid enthusiasts of

traditional Arabic poems and arts, as well as sports, especially thoroughbred horse racing. They also take

part in projects to aid developing countries such as Jordan, Egypt, Palestine and Yemen. In June 2010, Al

Maktoum’s net worth was believed to be $12.3 billion, having lost $6 billion from 2008 to 2009. The

Palm and World island projects in particular, two pet projects of Al Maktoum, had cost over $80 billion

in construction and had seen property prices fall over 50%.9

Mohammed bin Rashid Al Maktoum (Sheikh Mohammed).

9 http://www.forbes.com/2009/06/17/monarchs-wealth-scandal-business-billionaires-richest-royals.html

http://www.forbes.com/2009/06/17/monarchs-wealth-scandal-business-billionaires-richest-royals.html


Abu Dhabi – Zayed bin Khalifa Al Nahyan

Sheikh Zayed bin Khalifa Al Nahyan (1840–1909) was the grandfather of Sheikh Zayed bin Sultan, first

president of the United Arab Emirates. Sheikh Zayed the elder was made Ruler of Abu Dhabi after the

deposition of his cousin, Sheikh Said bin Tahnun, in 1855. He ruled for 54 years, until his death in 1909.

Sheikh Zayed bin Sultan (1918 – 2004), the principal architect of UAE was the ruler of Abu Dhabi and

president of the UAE for over 30 years (1971–2004). His son, Sheikh Khalifa bin Zayed bin Sultan Al

Nahyan (born 1948; referred to as Sheikh Khalifa) is the current President of the UAE and emir of Abu

Dhabi.

Sheikh Khalifa is known for his interest in sports traditional to UAE, chiefly horse and camel racing. He

is generally regarded as a pro-Western modernizer. Sheikh Khalifa’s brother, Sheikh Mansour bin Zayed

bin Sultan Al Nahyan, is the owner of British football (soccer) team Manchester City. Sheikh Mansour

has spent over $2 billion on Manchester City, and has been ranked by The Times-newspaper as the 6th

most powerful man in sports.

Sheikh Khalifa and his family control the Abu Dhabi Investment Authority (ADIA), the world’s largest

sovereign wealth fund and second largest institutional investor (after the Bank of Japan). The ADIA is

believed to have assets of around $400-600 billions.

Khalifa bin Zayed Al Nahyan with then President of Russia Vladimir Putin on 10 September 2007.

Transition of Power Historically, emirates in the Middle-east have been know for coup d'états and sudden power transitions.

But transitions of power in Abu Dhabi, Dubai and at a federal level have been smooth, and the Emirs are

popular. In November 2004 Sheikh Zayed, who had been ruler of Abu Dhabi since 1966 and president of

the UAE since its formation in 1971, died. His eldest son, Sheikh Khalifa, succeeded him as ruler of Abu

Dhabi and was elected president of the federation by the Supreme Council of Rulers within a few hours

of Sheikh Zayed’s death being confirmed. The smooth transition largely dispelled fears that inter-

emirate rivalries might threaten to destabilize the federation. A similarly smooth transition of power

happened in Dubai in January 2006, following the death of Sheikh Maktoum bin Rashid Al Maktoum, its

ruler since 1990, with the succession of his younger brother, Sheikh Mohammed, as both emir of Dubai

and prime minister of the UAE. These smooth transitions contrasted with the fractious family rivalries

that have sometimes resulted in forceful contests for leaderships in some of the smaller emirates, such

as Ras al-Khaimah.


The political scene will remain broadly stable in the forecast period. The president of the UAE and the

ruler of Abu Dhabi, Sheikh Khalifa bin Zayed al-Nahyan, has the backing of the ruling families in the other

six emirates, including the ruler of Dubai and prime minister of the UAE, Sheikh Mohammed bin Rashid

Al Maktoum. Sheikh Khalifa also enjoys the support of his half-brother and designated crown prince,

Sheikh Mohammed bin Zayed al-Nahyan, a younger, more dynamic figure, whose influence over

policymaking is increasing. The UAE has no formal legal structure for determining seniority, but strong

family ties between Abu Dhabi and Dubai should ensure smooth political transitions in the future. Power

will remain concentrated within the large ruling families, although relations within these families are

sometimes fractious. Sheikh Khalifa and Sheikh Mohammed bin Rashid are both young for Gulf rulers

and are therefore expected to remain in power throughout the forecast period. Both have crown

princes named as next in line, and there is little risk of problems with the succession processes when

they are eventually required. In the smaller northern emirates, there is always a small risk of power

struggles.10

Legislation The UAE uses coded (civil) law, as opposed to the (precedent based) common law practiced in the U.S.

There are also some elements of Islamic Sharia law in use in the UAE.

The Judicial System

The Federal UAE courts, similar to the courts in most of the countries in the Middle East, are organized

to form two main divisions; civil and criminal; and are also generally divided to three stages of litigation

namely courts of First Instance, Appeal and the Federal Supreme Court. The jurisdiction of the third

division, the Shariah courts, which initially was to review matters of personal and family affairs (‘moral’),

was expanded in certain Emirates such as Abu Dhabi to include serious criminal cases, labor and other

commercial matters. Important cases with a security aspect are referred to special courts.

There is no independent judiciary in the UAE. The Ministry of Justice appoints judges to the federal

courts, while judges in Abu Dhabi, Dubai and Ras Al Khaimah are appointed by the respective rulers of

those emirates. The majority of judges are non-Emirati. Each emirate applies federal law in its own court

system. Sharia law is applicable to both Muslims and non-Muslims, but is focused primarily on family,

inheritance and personal status matters. Courts will interpret statutory law and Sharia law in deciding

cases. Commercial disputes involving foreign parties tend to come before the civil courts in the federal

system; a panel of three judges ordinarily hears commercial disputes.

The Constitution

When the seven emirates formed the Federation, they agreed a Provisional Constitution which provided

the legal framework for the Federation. The Constitution provided for the establishment of the Supreme

Council of the Rulers of all the Emirates as the foremost authority in the Federation and a Council of

Ministers as the Executive Branch of the Federation. The Federal Government is entrusted with the task

of promulgating legislation concerning and regulating the principal and central aspects of the

Federation. These include foreign affairs, defense, security, the federal judicial system, federal finance

10

Economist Intelligence Unit, United Arab Emirates Country Report February 2011.


and loans, postal and communication services, federal public works, civil aviation, education, public

health, currency, electricity services, nationality and related matters, management of federal

possessions, census and federal information. As a Muslim country, one of the fundamental principles

enshrined in the Constitution provides that Islamic Law (Sharia) is the main source for legislation in the

UAE.

Sharia Law

Historically the legal systems of the Middle Eastern Islamic Arab countries were based on Islamic Law

(Sharia). Sharia (religious) Courts formed the judicial cornerstone of these countries. The modernization

of the majority of the legal systems in these countries at the beginning of the twentieth century, led to

the establishment of Civil Courts which were generally granted the competence to review civil

transactions as well as commercial and other types of disputes. Separate Criminal Courts were also

established. Matters of personal status such as marriage, divorce, custody and inheritance remained

with the Sharia Courts whose judges were trained in Islamic Law and Jurisprudence. Some Islamic Arab

countries such as Saudi Arabia maintained their legal systems which were, and still are, based on Islamic

Law. Their judiciary is organized on the basis of the Sharia Courts.

In the UAE the establishment of the Civil and Criminal Courts resulted in diminishing the role of the

Sharia Courts. Nevertheless, the competence of the Sharia Courts in some Emirates, particularly Abu

Dhabi, was substantially expanded later on to include, in addition to matters of personal status, all types

of civil and commercial disputes as well as serious criminal offences. Therefore, in addition to the Civil

Courts, each of the seven Emirates maintains a parallel system of Sharia Courts which are organized and

supervised locally.11

Disputes

There have been a few substantial investment disputes during the past few years involving U.S. or other

foreign investors and government and/or local businesses. There have also been several

contractor/payment disputes, with the government as well as local businesses. Dispute resolution can

be difficult and uncertain.12 Different parts of the local judiciary also have broad jurisdiction to hear

cases that involves contractual disputes regarding their area of competence in the UAE, regardless of

forum clauses. The exception to this is international arbitration clauses, these are generally upheld.13

11

http://gulf-law.com/uaecolaw_content.html 12

http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm 13

http://www.clydeco.com/knowledge/articles/litigation-and-dispute-resolution-in-the-uae-better-the-devil-you-know-not-always.cfm

http://gulf-law.com/uaecolaw_content.html

http://www.state.gov/e/eeb/rls/othr/ics/2009/117175.htm




International Affiliation The UAE are affiliated with the following organizations:

In April 2004, the UAE signed a Trade and Investment Framework Agreement with Washington and in

November 2004 agreed to undertake negotiations toward a Free Trade Agreement with the U.S.,

However, in 2007 the Bush administration put talks on hold, stating the UAE labor laws and human

rights issues as partial reason for postponing further talks.14

The Gulf Cooperation Council (GCC)

The Gulf Corporation Council (GCC) was formed in 1980, and is a political union between Bahrain,

Kuwait, Oman, Qatar, Saudi Arabia and the UAE. Yemen is in-process to become a member by 2016. The

GCC encompasses 39 million people and has a combined GDP of $900 bn. Among the stated objectives

are:

formulating similar regulations in various fields such as economy, finance, trade, customs,

tourism, legislation, and administration;

fostering scientific and technical progress in industry, mining, agriculture, water and animal

resources;

establishing scientific research centers;

setting up joint ventures;

unified military presence under ‘The Peninsula Shield’ (deterrent and aggravation response

force);

encouraging cooperation of the private sector;

strengthening ties between their peoples; and

establishing a common currency by 2015.15

14

http://www.ameinfo.com/142461.html 15

http://www.gcc-sg.org/

Aid Finance Other

Arab Fund for Economic and Social Development Arab Bank for Economic Development in Africa UN Food and Agriculture Organization

International Red Crescent Movement AMF IAEA

International Development Association International Bank for Reconstruction and Development ICC

International Fund for Agricultural Development The World Bank ICCt (signatory)

UN IMF International Labour Organization

UN Industrial Development Organization Multilateral Investment Guarantee Agency International Maritime Organization

Business/Trade Political International Mobile Satellite Organization

International Organization for Standardization G-77 Interpol

Organization of Arab Petroleum Exporting Countries Gulf Cooperation CouncilInternational Telecommunications

Satellite Organization

OPEC Islamic Development Bank International Telecommunication Union

UN Conference on Trade and Development Inter-Parliamentary Union UNESCO

Universal Postal Union Arab League WHO

World Customs Organization Non-Aligned Movement

World Federation of Trade Unions Organisation of the Islamic Conference

World Intellectual Property Organization

WTO

http://www.ameinfo.com/142461.html



Significant progress has been made in regional economic integration: The GCC countries have

unrestricted intraregional mobility of goods, labor, and capital; regulation of the banking sectors is being

harmonized; and in 2008 the countries established a common market. Further, most of the convergence

criteria for entry into the monetary union have already been achieved. In establishing a monetary union,

however, the GCC countries must decide on the exchange rate regime for the single currency. The

countries’ use of a U.S. dollar peg as an external anchor for monetary policy has so far served them well,

but rising inflation and differing economic cycles from the United States in recent years have raised the

question of whether the dollar peg remains the best policy.16

The GCC countries stood united during the North African and Middle East upheaval. On the 10th of

March, a joint aid package of $20 billion to Bahrain and Oman was agreed. The job-generating measure

will give $10 billion to each country in order to upgrade their housing and infrastructure over 10 years.

Saudi Arabia and the UAE are also planning to spend billions of dollars to improve the living standards of

their poorer citizens and are equally anxious to put a lid on unrest in their neighbors. Voices have even

been raised that following continuous unrest, Saudi Arabia could take control of Bahrain in order to

quell the unrest. The resent unrest has increased the GCC cooperation, and the GCC-countries have

increasingly been speaking with one voice in regards to foreign affairs; e.g. when criticizing the Libyan

regime.17

The logo for the 2010 UAE chairmanship of the GCC.

16

Mohsin S. Khan: The GCC Monetary Union: Choice of Exchange Rate Regime 17

http://www.khaleejtimes.com/DisplayArticle09.asp?xfile=data/middleeast/2011/March/middleeast_March192.xml&section=middleeast




International Relations, Security, and Defense

Immigration Before 1970, the local population was tiny (estimated at 86,000 in 1961) and lacked most of the

technical skills needed for a modern society. The commercial production of oil triggered the importation

on a large scale of mostly male foreign laborers. The latter factor has generated a dependence on

expatriate labor; the UAE has become a multiethnic society, and Emirati nationals account for only

about 20 percent of the population. This has created an umbalanced population composition in favor of

males.18

After the UAE’s independence, personnel for the Union Defense Forces and separate emirate forces

were recruited from several countries of the region, but soon enlistments from Oman and Yemen were

curtailed out of fear that personnel from these areas might spread dangerous revolutionary doctrines.

This is one example of how the UAE leaders have tried to curtail population infusions that could be

potentially harmful to the state’s stability.19

Although there have been some strikes and protests about employment conditions for low-wage

workers, there is little sign of any organized political opposition from among immigrant groups. Most

have better economic opportunities in the UAE than in their home countries, and so have little incentive

to try to change the system, particularly as they risk deportation and the loss of their income (which

often supports whole families in the country of origin). The security forces keep a close eye on the

foreign community, and have made it clear that they will not tolerate intercommunal tension or political

activity of any kind.20 So far, the recent Middle-east unrest has not spread to the UAE.

Defense As the largest in territory, the most populous, and by far the richest of the emirates, Abu Dhabi has

borne the brunt of funding the federation's military establishment. A major step toward unification of

forces occurred in 1976 when Abu Dhabi, Dubai, and Ras al Khaymah announced the merger of their

separate armed forces with the UDF. Sharjah had previously merged its police and small military units

into the UDF. In 1997, the union was further strengthened when Dubai disbanded its armed forces and

integrated them into the federal General Headquarters, which are based in Abu Dhabi.

The UAE is nearing the end of a 10-year, US$15 billion program to modernize its armed forces, upgrade

its defense capabilities, and acquire modern technology. As a result of these efforts, the country is

considered the most rapidly developing military power in the Gulf region. The UAE military consists of an

army, navy, and air force. In 2004 total active troops were estimated at 50,500 personnel: army, 44,000;

navy, 2,500; and air force, 4,000. Estimates in 2005 raised the total to 59,000 personnel. The UAE's

military is an all-volunteer, all-male force, of which an estimated 30 percent are expatriates.

18

http://www.everyculture.com/To-Z/United-Arab-Emirates.html 19

http://www.globalsecurity.org/military/world/gulf/uae-mil.htm 20

Economist Intelligence Unit, United Arab Emirates Country Profile

http://www.everyculture.com/To-Z/United-Arab-Emirates.html

http://www.globalsecurity.org/military/world/gulf/uae-mil.htm


The United States remains central to the UAE’s defense policy. A defense pact with the United States,

agreed to after the 1991 Gulf War and signed in 1996, allows the United States to preposition some

troops and equipment in the UAE and affords it some rights to use air bases in the emirates. In 2004 the

UAE and the United States signed a US$6.4 billion contract for the delivery of 80 F–16E/F Desert Falcon

combat aircraft to the UAE air force. The U.S., Britain, and the UAE share an air force base in the UAE,

and UAE-personnel occasionally train in the U.S. Despite the significance of the military relationship with

the United States, the UAE has sought diversification in the procurement of weaponry. France remains a

primary source of military materiel.

Military and Terrorist Threats

The UAE is concerned by the military threat posed by Iran, given Iran’s unilateral seizure of disputed

islands in the Strait of Hormuz, its possession of intermediate-range ballistic missiles, and its suspected

development of a nuclear capability. The UAE is not considered to be as vulnerable as Saudi Arabia to

the threat from al Qaeda and other militant Islamist groups, as these groups do not have a base of

operations or support in the emirates. There are, however, security concerns because of the general

volatility of the Gulf region, the repeated terrorist attacks in Iraq, the size and mobility of the UAE’s

large, predominantly Muslim expatriate population, and the country’s pro-Western and liberal business

environment. UAE officials are concerned about the deteriorating situation in Iraq, as well as the threat

of further U.S. military action in the region, particularly against Iran, and the impact such an action

would have on the UAE’s unpopular pro-Western stance.21

There is no organized political opposition either on a federal level or to the various ruling families

within the individual emirates. Like many of its Gulf neighbors, the UAE has been concerned about the

rise of hard-line Islamist groups in the region and, although there have been no significant incidents of

terrorism in the emirates to date, the government keeps a close eye on developments.22

21

http://www.globalsecurity.org/military/world/gulf/uae-mil.htm 22




International Relations Iran is resented for occupying three strategically located islands which the UAE claim sovereignty of.

Relations with Iran were tense after the UAE supported Iraq in the final stages of the Iran-Iraq war in the

1980s and after Iran took full control of the disputed islands, which it had previously administered

jointly with the respective emirates.23 On the other hand, Iran is a major trading partner and source of

investment, particularly as Iran channels much of its trade through Dubai (which has hundreds of

thousands of Iranian residents) to circumvent U.S. sanctions. Billions of dollars worth of U.S. goods are

repacked and shipped for Iran every year. This murky trade operates under the public radar, but its

existence is well known in the UAE, which does not impose inspections to any great degree on its local

shippers.24

23

Economist Intelligence Unit, United Arab Emirates Country Profile 24

http://www.portfolio.com/news-markets/international-news/portfolio/2008/08/13/US-Trades-With-Iran-Via-Dubai/




Infrastructure

Transportation

Rails

There are no railways in the UAE. Dubai has a newly built metro network (currently 2 lines covering

almost 50 stations). The $7.6 bn. project provides Dubai with the world’s most modern metro system.

The interior of a train of the driverless, fully automated metro network.

Roads

The road network is extensive and of good quality in the major urban areas, particularly Abu Dhabi and

Dubai, although peak-time congestion in Dubai has become a serious problem and congestion can be

worse than in London. In an effort to reduce congestion, the Dubai government has introduced a toll

system (Salik) on Sheikh Zayed Road, the main road running through Dubai, and further tolls are

expected. The road system is not as extensive in the poorer northern emirates, but investment is

ongoing and provision is steadily improving.

Maritime

The UAE’s maritime infrastructure has been highly developed for decades, but is having to expand its

capacity rapidly to handle the growing volume of trade. In addition to the two major facilities in Dubai,

Jebel Ali and Port Rashid, Sharjah city has a port and the emirate has another in its Khor Fakkan enclave

in the Sea of Oman. Dredging work has also been carried out at the nearby Fujairah port in a bid to

boost traffic. In spite of a long-term expansion project, Abu Dhabi’s main port, Mina Zayed, is becoming

overstretched and a replacement terminal, Khalifa Port, is being constructed at Taweelah, 30 km north

of Abu Dhabi city, where trade is scheduled to shift in 2011. Dubai’s ports have top-class facilities and

can service the largest container vessels that dominate the major shipping lanes.25

25

http://www.uae-shipping.net/



Air

The UAE has become a regional and global hub for air transport; both passengers and freight; because of

its strategic location between Europe, Asia and Africa and the immense public investment in airlines and

airport infrastructure. There are frequent flights from the UAE to the world’s major destinations. Dubai

International Airport, 2.5 mi from Dubai, is currently processing 47m passengers in 2010 (4th busiest in

the world). Al Maktoum International Airport in Dubai, with six runways and currently expanding, was

opened in July 2010. Located 25 mi away at Jebel Ali, it is part of the Dubai World Centre logistics

complex and will handle 12m t/y of cargo and 120m passengers/y when complete, more than any

airport in the world. Currently one runway is in use for cargo traffic, passenger traffic is due to

commence in late March 2011. Abu Dhabi International Airport has expanded rapidly and is estimated

to handle 12m passengers in 2011. One additional terminal is projected to open in 2012; this would

double the airport’s capacity. There are international airports in four other emirates, the most

significant being Sharjah’s, which processed 4m passengers in 2007, and even tiny Ajman is beginning to

build an international airport, due to open in 2011. The dominant airline is Emirates, which was founded

by the Dubai government in 1985. It is now the world’s sixth-largest airline, by number of international

passengers. Etihad Airways was launched by the Abu Dhabi government as recently as 2003; it presently

operates 47 international destinations.26

Telecom A state monopoly was disbanded in 2006. The previous monopoly company, Etisalat, is now the largest

carrier in the Middle East, and the 12th largest carrier in the world. Moreover, the Telecommunication

Regulatory Authority (TRA) still has great authority; material deemed offensive, or "inconsistent with the

religious, cultural, political and moral values of the United Arab Emirates", is usually blocked, as well as

pornography, dating, and gambling sites. For commercial reasons, there is also a total ban on internet

telephony (VoIP).27 Many of these restrictions though are easily circumvented. The UAE had 10.6 m cell-

phones and 3.5 m internet users in 2009. The country caller prefix is +971 the internet country code is

.ae.28

Energy Energy demand is growing rapidly across the UAE, driven by subsidized power charges, the construction

boom, energy-intensive industries (such as aluminum smelting and petrochemical production) and

population growth. Peak demand occurs over the hot summer months when air-conditioning is used

extensively and demands for water; which is almost all produced by desalination; also peaks. Yearly

demand increases 10-15%. Abu Dhabi has been building its capacity through independent water and

power projects (IWPPs), in each of which it holds a 60% stake and a private-sector developer holds 40%:

seven have been completed so far, and a contract to build the eighth, with a 1.5-gw capacity, was

awarded to Gaz de France Suez in July 2008. Dubai has developed its power and water generation

capacity without private-sector involvement, although it has expressed some openness to consider this

in the future. Shajah also manages its own generation, while the northern emirates are supplied by

26

www.abudhabiairport.ae, http://www.dwc.ae/dwc.html 27

http://opennet.net/studies/uae 28


http://www.abudhabiairport.ae/

http://www.dwc.ae/dwc.html

http://opennet.net/studies/uae



Federal Electricity and Water Authority (FEWA). In late 2007 the Federal National Council approved a

plan to part-privatize FEWA’s assets in order to attract investment for expansion. As electricity demand

is expected to increase dramatically over the next decade, meeting it has become a policy priority.

Almost all of the UAE’s existing and planned generation capacity is based on gas. Although Abu Dhabi

has significant gas reserves (mainly sour gas, contaminated with sulfur), which it is looking to develop

further, it is unlikely to be able to produce enough to meet its own demand. The UAE produced and

consumes about the same amount of gas (5 bn. cu ft/day). Around 1 bn. cu ft/d of the UAE’s production

is exported. Therefore the UAE has had to look to its neighbors to meet the growing shortfall in gas.

Demand projections suggest that imports will be insufficient in the medium term as the population

continues to expand, and therefore the UAE has been looking at alternative sources of electricity.29 Abu

Dhabi is planning on installing solar and wind capacity, as part of its $22 bn. Masdar City project, and has

invited bids for the construction of a 100-mw solar plant. Another source could be nuclear power, and

the UAE signed a nuclear co-operation deal with France, which envisages two 1.6-gw power stations

being built by French firms.30

29

Economist Intelligence Unit, United Arab Emirates Country Profile 30

http://www.masdarcity.ae/en/index.aspx



Economic Environment

Overview The UAE has an open economy with a high per capita income and a sizable annual trade surplus.

Successful efforts at economic diversification have reduced the portion of GDP based on oil and gas

output to 25%. The number is somewhat misleading though, as a large portion of public spending is

fueled by oil money, and oil-related activities still accounts for a large portion of GDP.

The UAE’s Free Trade Zones - offering 100% foreign ownership and zero taxes - are helping to attract

foreign investors. The global financial crisis, tight international credit, and deflated asset prices slowed

GDP growth in 2010. UAE authorities tried to blunt the crisis by increasing spending and boosting

liquidity in the banking sector. The crisis hit Dubai hardest, as it was heavily exposed to depressed real

estate prices. Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about

its solvency. The UAE Central Bank and Abu Dhabi-based banks bought the largest shares. In December

2009 Dubai received an additional $10 billion loan from the emirate of Abu Dhabi. The economy is

expected to continue a slow rebound. Dependence on oil, a large expatriate workforce, and growing

inflation pressures are significant long-term challenges. The UAE's strategic plan for the next few years

focuses on diversification and creating more opportunities for nationals through mandatory Emirate-

born parts of workforces, improved education, and increased private sector employment.31

The 2010 GDP and GDP/capita in comparison with other Middle Eastern countries.

31




GDP development The Economist Intelligence Unit (EIU) has revised up their 2011 growth forecast to 3.5% (from 3.1%

previously) owing to an upward revision in oil prices and production. Real GDP growth in the UAE is

forecast to average 5% in 2011-15, slightly lower than the estimated rate of 5.2% in 2006-10, but

respectable by international comparison.32 The Abu Dhabi Chamber of Commerce estimates that the

Abu Dhabi non-oil economy will grow 5.1% in 2011. This is due to increased activity in the private

sector.33 In the other side of the spectrum, investment bank EFG-Hermes Holding SAE lowered its

forecast from 3.4% to 2.9% on fewer expected projects in Abu Dhabi and slower spending in Dubai.34

The EIU conclude that the diversification program will boost the output of the industrial sector, with

some major projects expected to come on stream in the forecast period. However, the UAE will

continue to rely heavily on the hydrocarbons sector. Higher oil prices in the wake of the current regional

turmoil will boost the economy, but the prospect for an increase in oil production is limited. Production

will increase at a faster pace over the remainder of the forecast period. High government spending,

especially in Abu Dhabi, and improved consumer confidence will help to boost private consumption.

Expenditure on infrastructure projects will facilitate non-oil exports towards the end of 2012 as some

projects near completion. An almost tax-free environment, good infrastructure and the opportunity to

save will lead to a return to high levels of growth in the immigrant workforce in the forecast period,

after a fall in the expatriate population in 2009. If oil prices fall, the Abu Dhabi government will be able

to draw on its vast overseas investments to sustain public spending. The services sector will also register

solid growth, especially in the second half of 2012. In the near term, government and oil-related services

will continue to expand. In addition, Abu Dhabi will continue to invest in real estate and will also expand

its tourism and infrastructure sectors, albeit at a more reasonable pace than originally planned in its

long-term strategic plan. Other emirates such as Sharjah and Ras al-Khaimah are also developing

tourism. The outlook for financial services, however, remains uncertain in spite of Dubai World securing

agreement for its restructuring proposal. The EIU forecast for real GDP growth:35

32

Economist Intelligence Unit, United Arab Emirates Country Report February 2011 33


http://www.bloomberg.com/news/2010-10-14/u-a-e-2011-growth-forecast-cut-to-2-9-at-efg-hermes-on-slower-spending.html 35

Economist Intelligence Unit, United Arab Emirates Country Report February 2011


http://www.bloomberg.com/news/2010-10-14/u-a-e-2011-growth-forecast-cut-to-2-9-at-efg-hermes-on-slower-spending.html



Government Finances

Government Debt

The government debt is at a reasonable level. There have been suggestions to increase the federal

lending further, in order to provide liquidity to the regional bond market. The external debt (public and

private debt to non-residents) is at 56% of GDP and rank 33 in the world. The public debt in 2010:

Government Finances Economic Outlook

The global financial crisis, tight international credit, and deflated asset prices slowed GDP growth in

2010. UAE authorities tried to blunt the crisis by increasing spending and boosting liquidity in the

banking sector. The crisis hit Dubai hardest, as it was heavily exposed to depressed real estate prices.

Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about its solvency.

The UAE Central Bank and Abu Dhabi-based banks and the emirate of Abu Dhabi had to bail out Dubai

state-owned companies with bond purchases and loans.36

The basic economic indicators forecasted for the UAE.

36


World Rank Country Debt (% of GDP, 2010 est.)

29 Jordan 61.4

35 Bahrain 59.2

36 United States 58.9

61 United Arab Emirates 44.6

76 Yemen 39.1

88 Syria 29.8

114 Saudi Arabia 16.7

121 Kuwait 12.6

122 Qatar 10.3

129 Oman 4.4



Abu Dhabi has not remained immune to Dubai’s debt crisis. The government extended US$20 bn. in

financial aid to Dubai 2010 and has had to do the same for Aldar Properties, Abu Dhabi’s largest

property developer. Aldar concluded a US$5.2 bn. aid package from the Abu Dhabi government in

January as it has been severely hit by the downturn in the real estate market. Nevertheless, Abu Dhabi

will invest heavily in real estate, tourism and services projects, although some projects will be delayed or

scaled back. The UAE will also aim to recapture foreign investment that took flight when Dubai’s debt

problems surfaced last year. New laws to stimulate both domestic and foreign investment in the private

sector have been at the draft stage for some time and are facing domestic opposition. The foreign

business community and the UAE’s counterparties in free-trade negotiations have argued that the limit

of 49% on foreign ownership of companies in most sectors outside of free zones should be lifted, a view

taken under consideration by the UAE.

Fiscal policy will remain expansionary during the next five years, with expenditure projected to

increase considerably to support the diversification program. However, the new public debt law, which

was approved in 2010, limits the amount of debt financing for federal infrastructure projects to 15% of

total public debt. It also limits total public borrowing by the federal government to 25% of GDP or

US$54.5 bn., whichever is smaller. The law aims to establish a legal framework for federal debt issuance

in order to deepen the local bond market. Much of the increase in spending will come from Abu Dhabi,

as Dubai will concentrate on repaying its debt. Although Dubai World (DW), one of three major state-

owned companies in Dubai, concluded restructuring talks with creditors in 2010, further restructurings

will put pressure on the federal budget as Abu Dhabi may be required to provide additional support for

other Dubai government-related entities. The UAE is expected to maintain its attractive tax

environment, which will enable it to keep its competitive edge and draw in foreign investment. To

bridge the funding gap, the government is likely to increase charges for transport and public services in

an effort to augment revenue. EIU estimate that the federal budget will remain in surplus in 2011-12 at

an average of 2.3% of GDP, but forecast that it will move into deficit in 2013-15, with the shortfall

averaging 1.8% of GDP. As Dubai resolves its debt problems, government debt (domestic and external) is

expected to fall from an estimated 45.6% of GDP in 2010 to 27.6% of GDP in 2015.37

Exchange Rate

The Dirham

Since November 1997, the dirham has been pegged to the 1 U.S. dollar = 3.6725 dirham, which

translates to approximately 1 dirham = 0.272294 dollar. This means, that as long as the UAE central bank

can maintain their currency regime, the dirham will move in tandem with the dollar. It also means that

other economic indicators, such as inflation (regulation) and interest rates will have to move in tandem

with U.S. Federal Reserve’s moves. This has previously led to unrest among guest workers, as a

weakening dollar (and weakening dirham) reduces the guest workers currency remittance (to the guest

workers’ countries of origin).38

37

Economist Intelligence Unit, United Arab Emirates Country Report February 2011 38

http://www.forexexaminer.com/currency-peg-blamed-for-uae-unrest-financial-timesforex-news/



In 2009, the UAE withdrew from the GCC’s common currency project, which planned to launch a pan

Gulf-peninsula (with Saudi Arabia, Kuwait, Bahrain, and Qatar) monetary union in 2010. Allegedly, the

UAE withdraw over disagreement with the Saudis over where the new common central bank should be

headquartered.39 The common GCC currency has been planned for 30 years, and introduction is now

tentatively pushed back to at least 2015.40

There are no restrictions or delays on the import or export of either the UAE Dirham or foreign

currencies by foreigners or UAE nationals. Travelers entering the UAE must declare currency amounts of

more than $10,000.41 Generally, the dirham is secure and freely convertible. There are no restrictions on

profit transfer or capital repatriation.42

Interest Rates Monetary policy will continue to focus on protecting the banking sector and increasing liquidity in 2011,

but the Central Bank of the UAE will also monitor inflation closely. It announced, in early October 2010,

a one-month extension to the temporary repo (repurchase) rate of just 1%, in order to increase liquidity

in the financial system. However, the repo rate remains at 1%. UAE rates have to track US interest rates

broadly because of the currency peg - which discourages savings, as real interest rates are close to zero.

Financing The UAE has 28 foreign banks from several countries and 24 local banks. Foreign and local banks have

established 149 and 738 branches respectively in the UAE (as of 2009). Major banks are:

39


http://www.meed.com/sectors/economy/government/special-report-gcc-euro-crisis-has-lessons-for-planned-gcc-currency-union/3007700.article 41


Luxemburg Ministry of the Economy and Foreign Trade: Market Entry Guide to the UAE.

National Bank of Abu Dhabi United Arab Bank PJSC Emirates Islamic Bank

Abu Dhabi Commercial Bank Invest Bank PLC Mashreq Bank PSC

ARBIFT National Bank of R.A.K. Sharjah Islamic Bank

Union National Bank Commercial Bank International Bank of Sharjah PSC

National Bank of Dubai National Bank of Fujairah PSC Dubai Bank

Commercial Bank of Dubai National Bank of U.A.Q. Noor Islamic Bank

Dubai Islamic Bank PJSC First Gulf Bank Al Hilal Bank

Emirates Bank International Abu Dhabi Islamic Bank Ajman Bank

National Bank of Bahrain BNP Paribas Habib Bank AG Zurich

Rafidain Bank Janata Bank Standard Chartered Bank

Arab Bank PLC HSBC Bank Middle East CitiBank N.A.

Banque Du Caire Arab African International Bank Bank Saderat Iran

El Nilein Bank BLC Bank (France) S.A. Bank Meli Iran

National Bank of Oman Al Ahli Bank of Kuwait Blom Bank France

Calyon Bank Barclays Bank PLC Lloyd Bank TSB

Bank of Baroda Habib Bank Limited ABN-Amro Bank

United Bank Limited Samba Financial Bank National Bank of Kuwait

Doha Bank

Banks (UAE-based)

Banks (international)


http://www.meed.com/sectors/economy/government/special-report-gcc-euro-crisis-has-lessons-for-planned-gcc-currency-union/3007700.article




Abu Dhabi and Dubai each have a stock exchange. 39 out of 66 stocks on the Abu Dhabi stock

exchange and 40 out of 62 stocks on the Dubai stock exchange are open to foreign investment. Ministry

of Economy and Planning rules allow foreign investment up to 49 percent in companies on the stock

market; however, company by-laws in many cases prohibit or limit foreign ownership.

From power and desalination complexes through petrochemical plants, gas development, and

transportation projects, the role of the private sector in large-scale projects is becoming more varied

and important. Major international and local banks are behind these projects advising and arranging for

the major part of the financing, exceeding 75 percent on some of the independent water and power

projects. The proportion of financing and the transaction leadership is steadily shifting towards local and

regional banks.43 Due to the high-influx of foreign and local investors, financing is plentiful in the UAE

also for small-scale projects. Term loans are the most common option, followed by working capital

finance and bank guarantee/Letter of Credit.44

Capital Markets

GCC capital markets are still embryonic, with local, liquid corporate debt and mortgage backed securities

markets almost nonexistent. The regional stock exchange market cap relative to GDP is extraordinarily

high, with the UAE, Qatar, Bahrain and Kuwait at 130-200 per cent, a significant premium to the

international averages. This metric is misleading because only a small fraction of the GCC market cap is

actually traded on the stock exchange. Since the free floats in the regional exchanges are significantly

below those in the West and the major emerging markets and governments own the domestic banking

system, it is no wonder that GCC financial markets exhibit some of the highest volatility in the world and

the money supply fluctuations can and do trigger spectacular bull or vicious bear markets. After all, the

2005-06 stock market correction in the GCC proved that high economic growth or record oil prices are

no insurance against 50-70 per cent meltdowns in the stock market in a mere six to eight months. With

the expansion of Qatar and Abu Dhabi, the GCC does not have a liquid, continuous sovereign debt yield

curve. This is because higher oil prices have meant budget surpluses and obviated the need to borrow

funds in the international capital markets. Yet while the GCC is a net exporter of capital, its foreign

liabilities have surged at a phenomenal rate. For example, UAE banks have borrowed more than $50

billion, up six-fold since 2002, from the international money markets to finance the increase in size of

their domestic loan book. This is the linkage between the financial crisis and the pricing of bank risk in

the UAE. Property speculation, rent and wage spirals and the dollar peg are the main reasons for the

GCC’s inflation dilemma. The lack of deep, liquid domestic money and bond markets only contributes to

the GCC’s inflation surge since they do not restrain the rapid growth of the money supply. Rapid money

supply growth contributes to the casino finance zeitgeist that destabilizes the banking systems of the

GCC. The financial crisis was a wakeup call for GCC financiers.45

43

DOC: Country Commercial Guide for U.S. Companies 44

http://www.dubaicompanyformation.net/tag/business-financing-in-small-uae/ 45

http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/opinion/2008/February/opinion_February48.xml&section=opinion&col=

http://www.dubaicompanyformation.net/tag/business-financing-in-small-uae/




Payments

Payment is generally slower in the UAE than the U.S. and EU.46 During the recent downturn in Dubai,

contractors came under increasing pressure as more developers suspend projects or renegotiate

tendered prices. Projects that seem to be hardest hit appear to be the mixed-use residential and leisure

schemes, where demand has fallen significantly, owing in part to the inability of investors and buyers to

get credit. During the crisis several large estate projects where halted or scaled back, whilst most

infrastructure projects where continued uninterrupted.47

Business is based on relationships; a number of contractors only enter into contracts with employers

where the two have a proven business relationship. You may be able to negotiate an advance payment

from your client to ensure they can mobilize and, if appropriate, commence design. But most export to

the UAE is most often facilitated by a Letter of Credit (L/C). The most commonly used type of L/C

include: Sight, Deferred Payment, and Revolving L/Cs. There is no default law protection regarding

payment period in the Gulf Region. Instead, the payment period depends on what you negotiate with

your client. While a payment period of two months is common in the UAE, you should aim to get it cut

down in your contract to about a month.48

Credit ratings on corporations can be obtained by Standard & Poor’s

(http://www.standardandpoors.com/home/en/us) or Moody’s (http://www.moodys.com/). State

owned Emcredit (http://www.emcredit.com/en/default.aspx) is a local alternative for credit ratings and

credit reports. The government is also launching an agency for private credit rating during the first half

of 2011.49

Inflation The EIU estimates that inflation averaged 0.9% in 2010. Inflation is forecast to average 2.2% in 2011-15,

well below the highs of 2005-08,

due to a fall in housing costs.50

The EIU forecast of CPI.

46


http://online.wsj.com/article/SB10001424052748703408604576164703521850100.html?KEYWORDS=dubai 48

http://www.building.co.uk/news/seven-ways-to-get-paid-in-dubai/3133997.article 49

http://www.reuters.com/article/2010/12/06/us-emirates-credit-idUSTRE6B53RJ20101206 50


http://www.standardandpoors.com/home/en/us

http://www.moodys.com/

http://www.emcredit.com/en/default.aspx

http://online.wsj.com/article/SB10001424052748703408604576164703521850100.html?KEYWORDS=dubai

http://www.building.co.uk/news/seven-ways-to-get-paid-in-dubai/3133997.article

http://www.reuters.com/article/2010/12/06/us-emirates-credit-idUSTRE6B53RJ20101206


Labor Market Unemployment in the UAE has risen to above 4%. Expats account for 85% of the labor force.

The UAE central bank unemployment data.51

This figure does not account for the number of illegal expatriates entering the labor market on constant

basis. Therefore the actual unemployment rate might be higher. Due to the increase in population and

the expansion in the number of national graduates from universities and high schools, unemployment

among nationals became an acute problem in recent years. The table below shows unemployment rate

by sex for nationals and non-nationals for the seven Emirates of the UAE by mid 2003. It indicates that

the UAE unemployment rate for nationals stands at 10.4 percent, while the total unemployment rate

(nationals and non-nationals) is 2.8 percent. It also indicates that the unemployment rate is higher in the

case of females. It is 16.5 percent among female compared to 8.4 percent for male.52

Labor policy will continue to focus on the increased involvement of Emiratis in the private sector. The

government recently amended the sponsorship system to allow all workers, skilled and unskilled, to

leave their employers if contractual arrangements or other employment standards were not met. At the

same time, the government also announced that UAE nationals should make up a minimum of 20% of a

company’s workforce, irrespective of sector. These amended rules came into effect from 2011. The

economy will remain dependent on immigrant labor in the long term.53 Trade unions do not exist. In the

case of a dispute between an employer and an employee the Ministry of Labor and Social Affairs will

51

http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=AED 52

Reem M. Albuainain: Unemployment Rate In the United Arab Emirates: The case of Abu Dhabi 53


http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=AED


initially act as an adjudicator in an effort to resolve matters. If a party wishes to appeal any decision

taken, it can take its case to court. Strikes and lockouts are forbidden.54

Labor Cost

The labor cost in the UAE has risen with the economic development, but salaries are not that lucrative

as they once were. A business development manager (with 5 years experience) who speaks both English

and Arabic make on average $6,400 per month. A civil engineer makes around $3,500.55 Median salaries

are slightly higher in Abu Dhabi than in Dubai, and around double those of other Emirates.56 Note that

the UAE has no income or sales tax. But in general, the salaries have not grown in the same rate as cost

of living the last decade. Unskilled service wages are very low, around $0.5-2 per hour.57 But with tip

included, many guest laborers in service professions support extended families in their home countries

with what they earn in the UAE. People from neighboring countries consider themselves fortunate to

get a job in the UAE.58 The government has worked to increase labor rights and safety. Since 2005 there

is a prohibition of outdoor work between 12:30 and 3:00 p.m. during the hot summer months (“mid-day

break”-rule).59 The very fact that the UAE is 85 percent expatriate makes the concept of salary different

to most countries in that people's needs are somewhat different, and it would be safe to say that that

work is more transient than permanent.60

Taxation The UAE has no corporate, income or sales/VAT tax. Earnings remitted to the U.S. (parent) are subject to

U.S. taxation.

Investment Climate

Free zones

The Jebel Ali Free Zone in Dubai (http://www.jafza.ae/) being the first Free Zone in the country has

created the benchmark for regulations &

incentives. Started in 1985, its rapid growth has

also provided a powerful economic inspiration to

the other Emirates, which have set up their own

Zones to attract investment. Jebel today include

120 Fortune 500 companies and offers a set of

products and services such as: business centers,

ready to use offices, warehouses, factories, and

infrastructure ready plots. In addition the one stop

shop services provide registration and licensing of

54

Luxemburg Ministry of the Economy and Foreign Trade: Market Entry Guide to the UAE. 55

http://www.payscale.com/research/US/State=Dubai/Salary 56

Luxemburg Ministry of the Economy and Foreign Trade: Market Entry Guide to the UAE. 57

http://www.grapeshisha.com/typical-Dubai-salaries.html 58

http://www.escapeartist.com/efam/69/Living_In_The_UAE.html 59

www.uae-embassy.org 60

http://www.grapeshisha.com/typical-Dubai-salaries.html

http://www.jafza.ae/

http://www.payscale.com/research/US/State=Dubai/Salary


http://www.escapeartist.com/efam/69/Living_In_The_UAE.html



companies, sponsorship and issuing of work permits for employees. With the number of zones

increasing, their impact on the UAE economy has deepened. UAE Free Zones are home to around 10,000

companies. The zones are part of Economic Zones World (EZW), which is the global developer and

operator of economic zones, technology, logistics and industrial parks (http://www.ezw.ae/).

Openness to foreign investment

At present, the regulatory and legal framework favors local over foreign investors. There is no national

treatment for investors in the UAE, and foreign ownership of land and stocks is restricted. The UAE

maintains non-tariff barriers to investment in the form of restrictive agency, sponsorship, and

distributorship requirements. In order to do business in the UAE outside one of the free zones, a foreign

business in most cases must have a UAE national sponsor, agent or distributor. However, the UAE

government is opening up its trade sectors in line with its WTO obligations. The UAE has been

suspended from U.S. OPIC insurance programs since 1995 because of the UAE's lack of compliance with

internationally recognized worker rights standards, particularly laborers' rights to association and

collective bargaining.61

Financial standard compliance ranking of the UAE.62

FDI

The UAE has attracted more than US$51 billion in foreign direct investment (FDI) in 2005-2008 to

maintain its position as the second largest FDI destination in the Arab region, according to official data.

In 2008, the UAE accounted for around 14.2 per cent of the total FDI of about US$96.48bn pumped into

the Arab World, showed the figures by the Inter-Arab Investment Guarantee Corporation (IAIGC). The

UAE was ranked second after Saudi Arabia in the region in terms of FDI. In 2008 a new department for

foreign investment at the Ministry of Economy was created, which facilitate foreign investments in the

UAE.

61


http://www.estandardsforum.org/united-arab-emirates/standards

http://www.ezw.ae/




100% foreign ownership is allowed in

certain sectors (education, health,

professional services and computer-related

services), whilst other companies

established in the UAE are required to have

a minimum of 51 percent UAE national

ownership. The UAE also restricts foreign

ownership of land, with rules varying from

emirate to emirate. All free zones provide

100 percent import and export tax exemption, 100 percent exemption from commercial levies, 100

percent repatriation of capital and profits.

Government Contracts

Supplier, contractor, or tenders for federal projects must either be a UAE national or a company in

which UAE nationals own at least 51 percent of the share capital or foreign entities represented by a

UAE distributor or agent. Foreign companies wishing to bid for a federal project must, therefore, enter

into a joint venture or agency arrangement with a UAE national or company. Federal tenders must

accompany a bid bond in the form of an unconditional bank bond guarantee for 5 percent of the value

of the bid. If goods and services are not available locally then UAE federal government entities often

tender internationally.

Expropriation

Foreign investors have not been involved in any expropriations in the UAE in recent years. There are no

set rules governing compensation if expropriations were to occur, and individual emirates probably

would treat this differently. In practice, authorities in the UAE would not expropriate unless there was a

compelling developmental or public interest need to do so, and in such cases compensation would likely

be generous.


Trade

The U.S. and the UAE currently share one of the fastest growing commercial and trade partnerships in

the world, which is highlighted by the dramatic rise in U.S. exports and FDI flowing into the Middle East

growing from $3.6 billion in 2002 to $15.7 billion in 2008. The UAE has emerged as America’s largest

export market in the Middle East.

The UAE major import and export partners. 2009 Eurostat data.


U.S. Trade The 2010 U.S. Census Bureau data shows that import to the U.S. was $1,145.0 million (ranked 72nd

amongst imports by nation) and export from the U.S. at $11,638.3 million (ranked 21st). Hence, then U.S.

has a $10,493.3 million trade balance surplus towards the UAE. In relative terms, this is the U.S largest

trade balance surplus. This highlights the UAE’s role as a huge net importer; the UAE imported more

worth of oil drilling equipment from the U.S. than the value of U.S. import of UAE oil.

The DOC’s ITA U.S. export statistics to the UAE, per sector.63

As the chart above indicates, the export of civilian aircrafts and passenger cars were the major sector of

export, while machinery and electronics and computer products also represented areas with significant

export to the UAE. In relative terms, goods export in the waste and scrap-category has increased in

recent years.

63

http://www.trade.gov/mas/ian/tradestatistics/index.asp

ITEM 2005 2006 2007 2008 2009 2005-2009 Change

336--TRANSPORTATION EQUIPMENT 4,250,682,127 5,529,656,684 4,310,676,933 5,549,818,222 4,811,741,114 -1,849,977,041

333--MACHINERY, EXCEPT ELECTRICAL 1,101,917,476 1,399,806,056 1,787,375,488 2,636,519,814 1,867,521,056 34,405,205

334--COMPUTER AND ELECTRONIC PRODUCTS 549,012,936 818,400,390 1,170,898,213 1,199,002,507 1,265,032,889 762,229,745

325--CHEMICALS 356,329,738 377,682,724 515,926,366 606,352,008 679,570,671 416,006,569

339--MISCELLANEOUS MANUFACTURED COMMODITIES 374,808,494 433,464,895 499,474,861 870,227,697 647,079,866 227,796,342

335--ELECTRICAL EQUIPMENT, APPLIANCES & COMPONENTS 186,991,909 272,841,828 339,966,551 554,310,851 475,656,306 345,344,217

111--AGRICULTURAL PRODUCTS 101,124,995 168,770,360 244,913,649 230,139,954 424,659,847 341,419,227

332--FABRICATED METAL PRODUCTS, NESOI 164,279,562 224,601,347 259,484,213 386,691,993 405,902,767 327,080,278

311--FOOD MANUFACTURES 113,805,593 114,754,549 181,223,942 281,641,730 286,934,938 185,987,691

990--SPECIAL CLASSIFICATION PROVISIONS, NESOI 145,952,024 175,033,176 229,888,633 413,337,484 286,886,848 170,311,127

324--PETROLEUM & COAL PRODUCTS 44,919,302 39,240,953 48,855,485 71,708,541 216,613,276 37,466,862

331--PRIMARY METAL MFG 359,932,080 290,483,785 603,332,172 806,036,872 185,301,813 -15,230,054

326--PLASTICS & RUBBER PRODUCTS 55,432,851 67,330,904 110,776,631 159,813,497 111,109,587 97,981,935

327--NONMETALLIC MINERAL PRODUCTS 38,719,608 52,020,724 65,705,516 87,909,987 75,026,602 23,369,281

920--USED OR SECOND-HAND MERCHANDISE 15,154,933 23,254,560 68,039,259 100,674,680 69,485,705 29,308,070

322--PAPER 39,184,474 37,625,934 49,716,460 68,074,904 63,519,459 52,448,676

315--APPAREL MANUFACTURING PRODUCTS 18,458,688 31,149,804 46,296,535 67,224,603 58,437,655 42,896,001

112--OTHER ANIMALS 60,642,375 51,251,646 27,272,438 62,808,745 56,464,363 -10,200,145

337--FURNITURE & FIXTURES 35,455,504 37,261,478 53,188,940 69,147,852 52,648,609 33,517,571

323--PRINTED MATTER AND RELATED PRODUCTS, NESOI 18,933,915 26,090,632 31,341,740 38,962,798 38,728,397 17,333,370

316--LEATHER & ALLIED PRODUCTS 10,834,093 15,876,975 21,994,174 31,688,088 28,336,063 16,473,677

314--TEXTILE MILLS PRODUCTS 14,678,314 21,134,280 26,559,949 31,164,148 21,317,446 15,903,890

321--WOOD PRODUCTS 10,615,702 12,221,668 19,093,094 31,293,777 18,168,289 11,321,855

313--TEXTILES & FABRICS 9,205,416 9,844,463 11,756,838 13,062,358 16,545,977 8,306,543

312--BEVERAGES & TOBACCO PRODUCTS 25,932,476 27,547,710 30,179,511 19,555,915 14,950,530 -6,964,288

910--WASTE AND SCRAP 5,555,829 6,658,164 18,418,426 11,039,852 13,491,146 29,468,261

212--MINERALS & ORES 4,657,414 5,999,957 2,140,212 6,790,197 10,871,791 6,323,130

114--FISH, FRESH/CHILLED/FROZEN & OTHER MARINE PRODUCTS 2,335,826 3,386,466 4,523,434 5,298,542 3,738,749 1,897,114

113--FORESTRY PRODUCTS, NESOI 1,989,338 2,240,430 5,062,865 5,827,118 3,596,643 7,039,753

511--NEWSPAPERS, BOOKS & OTHER PUBLISHED MATTER, NESOI 1,873,962 1,200,345 2,523,775 1,139,318 1,338,647 2,060,565

211--OIL & GAS 110,403 183,592 42,385 134,391 186,308 -21,437

TOTAL 8,119,527,357 10,277,016,479 10,786,648,688 14,417,398,443 12,210,863,357 1,361,303,990


Fast-growing sectors

American shipments of fuel oil to UAE spiked by a 114.6% increase in 2008, followed by 9 other product

categories with triple-digit increases of at least 176.5%.

Fuel oil $14.9 million, up 114.6%

Aircraft launching gear including parachutes $8.7 million, up 519.7%

Non-farm tractors and parts $72.5 million, up 511.1%

Manufactured wood supplies $10.4 million, up 354.8%

Copper $3.1 million, up 239.5%

Artillery, guns, missiles and tanks $53 million, up 209.5%

Agricultural machinery and equipment $100.6 million, up 203.3%

Primary synthetic rubber $11.8 million, up 184.6%

Railway transportation equipment $9.7 million, up 184%

Vegetables $27.1 million, up 176.5%.

Sector Recommendations

Although oil and gas production will remain the backbone of the UAE economy for years to come, the

non-oil sector of the economy is growing at a rapid pace. Major growth areas include: aircraft & parts,

security and safety equipment; IT equipment and services; medical equipment, services and supplies;

architecture, construction, and engineering services; building products; air conditioning and

refrigeration equipment; environmental and pollution control equipment; and sporting goods and

equipment. Water and power projects continue to offer considerable opportunity due to the UAE’s

unquenchable thirst for water and electricity.64

California Trade Yearly California world export equals 6.3% of the $1.89 trillion gross state product (GSP) in 2009 (down

from 8% in 2008). This is very low compared to nation states, a testament to the significant U.S. intra-

country trade.

Value

When looking at the California export country-by-country, the UAE rank by far highest among Middle

Eastern and North African countries. The UAE’s import of Californian goods and services is around 10%

of China’s import from California.

64

DOC: Country Commercial Guide for U.S. Companies


California export to the Middle East.

Products

The export from California in terms of sector focuses on agricultural products. As the UAE has almost no

agricultural production of its own, food is a major import sector. California’s strong IT/electronics sector

also is a major exporter to the UAE.

California export by sector.65

65

http://tse.export.gov/TSE/

Partner 2005 2006 2007 2008 2009 Total

World 116,689,901,804$ 127,770,793,810$ 134,318,906,761$ 144,805,748,349$ 120,079,965,765$ 643,665,316,489$

China 7,821,342,315$ 9,970,700,069$ 10,566,024,437$ 10,981,739,113$ 9,744,452,187$ 49,084,258,121$

United Arab

Emirates 1,141,970,612$ 942,359,751$ 947,945,033$ 1,156,414,895$ 1,149,504,162$ 5,338,194,453$

Saudi Arabia 232,289,603$ 315,128,462$ 435,392,453$ 635,175,361$ 597,694,331$ 2,215,680,210$

Kuwait 87,343,031$ 113,702,840$ 179,518,487$ 185,472,476$ 190,499,587$ 756,536,421$

Jordan 73,723,286$ 72,361,092$ 135,818,994$ 158,230,672$ 249,472,237$ 689,606,281$

Lebanon 52,242,107$ 62,781,934$ 82,023,367$ 191,472,500$ 251,848,928$ 640,368,836$

Qatar 37,456,744$ 61,067,842$ 92,157,216$ 120,880,419$ 103,069,999$ 414,632,220$

Iraq 34,461,006$ 62,958,456$ 69,297,962$ 51,424,707$ 99,403,298$ 317,545,429$

Oman 20,954,959$ 38,567,035$ 140,657,211$ 70,945,352$ 40,429,576$ 311,554,133$

Bahrain 20,019,249$ 37,138,263$ 38,945,436$ 57,969,461$ 45,889,294$ 199,961,703$

SECTOR 2005 2006 2007 2008 2009 2010

111--AGRICULTURAL PRODUCTS 66,588,843$ 90,043,600$ 111,448,506$ 117,577,014$ 244,251,494$ 380,736,586$

334--COMPUTER AND ELECTRONIC PRODUCTS 124,837,943$ 180,923,890$ 413,298,606$ 279,270,524$ 281,426,150$ 365,779,096$

336--TRANSPORTATION EQUIPMENT 775,631,762$ 437,808,752$ 110,671,993$ 211,038,940$ 185,075,155$ 226,024,664$

333--MACHINERY, EXCEPT ELECTRICAL 50,527,158$ 63,412,147$ 82,388,597$ 157,190,995$ 158,330,005$ 68,013,863$

339--MISCELLANEOUS MANUFACTURED COMMODITIES 24,136,181$ 45,735,319$ 55,300,032$ 113,051,058$ 54,177,338$ 58,837,820$

325--CHEMICALS 20,139,042$ 24,677,107$ 36,417,754$ 48,221,853$ 45,481,414$ 48,406,318$

335--ELECTRICAL EQUIPMENT, APPLIANCES & COMPONENTS 10,154,106$ 28,925,550$ 26,593,709$ 35,355,351$ 22,154,752$ 38,552,674$

311--FOOD MANUFACTURES 8,496,650$ 11,969,068$ 21,043,483$ 31,047,819$ 42,500,551$ 35,258,991$

315--APPAREL MANUFACTURING PRODUCTS 10,201,650$ 15,709,641$ 25,002,238$ 38,030,429$ 29,801,563$ 28,465,002$

910--WASTE AND SCRAP 109,516$ 150,604$ 1,941,865$ 974,421$ 4,777,348$ 27,718,850$

326--PLASTICS & RUBBER PRODUCTS 1,489,314$ 4,016,531$ 7,951,655$ 16,473,347$ 17,649,448$ 16,239,935$

332--FABRICATED METAL PRODUCTS, NESOI 7,713,842$ 12,798,845$ 16,963,061$ 31,688,880$ 15,581,749$ 13,886,210$

316--LEATHER & ALLIED PRODUCTS 2,871,550$ 4,100,340$ 7,622,387$ 11,373,978$ 7,523,944$ 11,202,830$

337--FURNITURE & FIXTURES 1,173,064$ 1,741,339$ 3,411,840$ 7,346,763$ 4,559,122$ 8,978,402$

920--USED OR SECOND-HAND MERCHANDISE 1,195,920$ 1,088,926$ 2,775,454$ 5,786,536$ 5,115,116$ 6,845,490$

990--SPECIAL CLASSIFICATION PROVISIONS, NESOI 8,167,044$ 6,806,074$ 10,058,882$ 4,871,372$ 6,302,381$ 6,288,874$

331--PRIMARY METAL MFG 2,849,993$ 3,567,920$ 3,596,624$ 6,603,286$ 4,319,471$ 4,943,383$

327--NONMETALLIC MINERAL PRODUCTS 3,548,073$ 2,695,708$ 4,462,014$ 5,159,622$ 6,907,247$ 3,454,707$

322--PAPER 1,010,129$ 1,811,971$ 1,001,859$ 2,194,723$ 1,112,656$ 2,036,250$

112--OTHER ANIMALS 16,913,321$ 291,876$ 259,352$ 12,740,666$ 5,063,932$ 1,949,697$

312--BEVERAGES & TOBACCO PRODUCTS 1,865,029$ 1,347,549$ 2,400,722$ 2,407,985$ 2,079,908$ 1,572,364$

323--PRINTED MATTER AND RELATED PRODUCTS, NESOI 580,550$ 619,770$ 665,865$ 3,697,035$ 1,627,118$ 1,156,053$

314--TEXTILE MILLS PRODUCTS 852,042$ 985,527$ 1,356,235$ 2,564,762$ 754,922$ 907,105$

113--FORESTRY PRODUCTS, NESOI 72,472$ 11,245$ -$ 25,715$ 288,881$ 677,613$

212--MINERALS & ORES 12,531$ 31,015$ 37,734$ 40,148$ 224,949$ 585,690$

313--TEXTILES & FABRICS 285,694$ 141,589$ 372,869$ 1,031,023$ 866,040$ 550,533$

511--NEWSPAPERS, BOOKS & OTHER PUBLISHED MATTER, NESOI 289,666$ 241,454$ 364,206$ 213,626$ 265,159$ 447,159$

321--WOOD PRODUCTS 76,489$ 137,595$ 193,302$ 1,714,267$ 655,880$ 336,866$

324--PETROLEUM & COAL PRODUCTS 124,386$ 317,025$ 133,048$ 8,455,808$ 300,113$ 318,718$

114--FISH, FRESH/CHILLED/FROZEN & OTHER MARINE PRODUCTS 27,965$ 251,774$ 211,141$ 266,949$ 330,356$ 260,687$

TOTAL 1,141,970,612$ 942,359,751$ 947,945,033$ 1,156,414,895$ 1,149,504,162$ 1,360,432,430$



Services

The sector for import of services to the UAE is heavily dominated by transportation, construction,

financial, and travel services. High product quality, reliability, training, and after-sale service continue to

be attractive features for U.S. service exports. The UAE imported $42,733.0 million worth of services in

2008 ($25,478 million in transportation-category and $13,287 million in travel-category), and exported

services worth $8,958.0 million.66 As the UAE is not a member of the OECD, no service-import/export

statistics between the country and the U.S. is available.

66

http://unstats.un.org/unsd/servicetrade/

http://unstats.un.org/unsd/servicetrade/dqBasicQueryResults.aspx?px=EB&cc=982,200,981,245,249,253,247,260,262,263,264,268,269,271,273,272,275,276,277,258&r=784&y=2008


Trading With the UAE

The UAE, although an attractive market for a wide variety of products, can be a difficult place for

American firms to do business. It is not a market for the first-time exporter. The legal system protects

local entities. Foreign companies find it difficult to legally dismiss a non-performing local agent without

protracted litigation, and it is difficult, if not impossible, to sell without a local agent. Payments tend to

be slower than in the US and Europe. In the Middle East, personal relationships are essential when

conducting business. Maintaining a local presence offers distinct advantages. Local business and

government officials prefer to deal with someone they know and trust.67

Culture Some cultural highlights to consider in the UAE are:

Culture is very much tied to religion.

Male dominated society.

Women hold the power in the home.

Family unit is very important; families are big and people tend to live close to relatives.

Generations will often live together in the same house.

Family and friendship ties are more important than meritocracy. Family and tribal background is

very important – influential families and tribes have a lot of clout in many parts of the UAE

society.

Muslim Customs

As a Muslim country, some of the basic Muslim customs you should now of are:

Dietary: In Islam, forbidden items include pork and all its products; animals improperly

slaughtered (has to be slaughtered in Halal-tradition); alcoholic drinks, including all forms of

intoxicants; carnivorous animals; birds of prey; and any food contaminated with any of these

products.

Liquor: Is strongly prohibited.

Gambling: Is strongly prohibited.

Interest: A common misperception is that interest is prohibited in Islam, which is not the case.

But usury (interest) is prohibited.

Business Customs

Meeting & Greeting

Status is important and must be recognized by using the correct title when addressing someone. It is

customary to use Sheikh (chief) (or Sheikha for a woman), Sayed (Mr.), Sayeda (Mrs.). Arabs generally

address people by their first names, so John Smith will be addressed as Mr. John (or Mr. Mohammed in

the reverse situation). It is important to greet and acknowledge the most senior person in the room first.

When doing business in the Middle East, handshakes are always used and can last a long time. Etiquette

67



recommends that one waits for the other to withdraw their hand first before doing the same. For a man

introduced to a woman, it is advisable to wait and see if a hand is extended. Particularly in public,

Muslim women are unlikely to shake a man’s hand. A Western woman introduced to a Muslim man

might also wait to see if he offers his hand. Always use the right hand. Among Muslims, the left hand is

reserved for bodily hygiene and considered unclean. The right hand should be used for eating, shaking

hands, or handing over an item. Do not be surprised if your hand is held while you are led somewhere.

Holding hands among men is common and does not carry the same connotations as it does in the West.

Many people in the Middle East claim a more modest area of personal space than is usual in the West.

Accordingly, it can seem rude for an individual to step away when another individual is stepping closer.

Special respect is paid to older people in many circumstances. This can include standing when older

people enter a room, always greeting older people first, standing when speaking to one’s elders, and

serving older people first at a meal.

Gifts

In terms of gift giving, something personal can be a very meaningful touch. It would be appropriate,

although not expected, to present a small or token gift to an individual to whom one is being

introduced, say for example a book one has written or very much enjoys, a special company memento,

or something related to one’s background or hobbies. However, it is not advisable to give a pen or a

clock just for the sake of providing a gift. Very senior leaders may or may not provide a gift although it

would not be required for one to provide a gift in return.68

Gender & Attire

Men should avoid touching and prolonged eye contact with Muslim women. It is considered improper to

inquire about a man’s wife or daughter. It is polite to ask about family or health, but never specifically

about any female members. Family life that involves female members is kept extremely private. The

modesty of one’s personal attire is important in the Middle East. Men and women should wear very

non-revealing clothes (covering shoulders, arms and legs, and closed-toe shoes) to avoid offending

locals. When visiting religious sites, women must also cover their hair. In some circumstances shoes

should be removed, such as at the entrance to religious sites. It is acceptable to wear a bikini/swimming

costume or swimming trunks for men on the beach, but it is an arrestable offence to go topless or wear

a thong. Swimming attire is fine for the beach under these rules, but it is not acceptable once you leave

the beach; don't walk around the streets in a bikini.69

Relationship

In the Middle East, doing business revolves much more around personal relationships, family ties, trust

and honor. It is therefore important that business relationships be built on mutual friendship and trust.

As a consequence of this, if you have friends or contacts in the right places, rules may be bent or things

may be done more quickly. The system works on the basis that favors are reciprocated and never

forgotten. Initial meetings are all about relationship-building; building trust and establishing

compatibility. One should engage in conversation and try to get to know the person with whom one is

68

http://www.usuaebusiness.org/index.cfm?fuseaction=section.home&id=61 69

http://gulfnews.com/news/gulf/uae/general/mind-your-language-behaviour-and-dress-in-the-uae-1.118951

http://www.usuaebusiness.org/index.cfm?fuseaction=section.home&id=61



doing business. Age, money, and family connections are all key determining factors of a person’s status.

Who you are is usually more important than what you have achieved. It is therefore not uncommon to

find many members of one family working for the same company. In conversation, it is always good to

ask about the health and well being of a counterpart’s family. How many children? (Do not ask how

many wives!) What are the children doing? Where have they studied or about to study? Taking interest

in a counterpart’s family is an important way of building early trust and connection.

Meetings & Negotiations

Emiratis are not too punctual, but expect you to be. Meetings could be interrupted by calls from family

members, as family is very important in the UAE. When holding business meetings in the UAE, some

foreign businesspeople suggest holding the meeting in the lobby of an international hotel rather than in

an office. The advantage of this is that there will be fewer people wandering in and out of the meeting.

Also, your counterpart’s willingness to come to you demonstrates a true interest. You will also have

access to refreshments that may be more to your taste.70 Government offices open at 7:30 am Sunday

through Thursday, closing at 2 p.m. for the day. Local businesses often close from 1:00 p.m. until 4:30 or

5:00 p.m. and then reopen for several hours. Visitors should plan appointments around these timings, as

UAE businesspeople may not adjust their schedules in order to meet during their closing time. Private

UAE companies close Friday and Saturday afternoon. Business meetings are rarely, if ever, held on

Friday or Saturday afternoon, which UAE nationals value as family time.71

Religion

Insulting Islam or the prophets is a serious offense. It is also illegal to bring in artifacts that offend Islam.

Muslims follow the doctrines of the Koran, which forbids consumption of alcohol, pork products, and

shellfish. It is best not to consume these in the presence of government or religious officials. It is also

prohibited to drink alcohol in public. Muslims pray five times a day. You will likely hear the calls to

prayer, which occur roughly between dawn and sunrise, about half an hour after mid-day, mid-

afternoon, right after sunset, and an hour and a half after sunset.

Other

People in the Middle East may communicate with a vocal emphasis, volume and body language that

others might associate with being angry or upset. Responding to anger or seriousness with light laughter

or a smile is common, and does not mean you’re not being taken seriously.72 Kissing in public and public

displays of affection is frowned upon. Homosexuality and indecent gestures could land you in jail.73

Useful Expressions

The customary greeting is “As-salam alaikum” (peace be upon you) to which the reply is “Wa

alaikum as-salam” (and upon you be peace).

Goodbye is “Ma salamaa”

Please is “Min Fudlek” and thank you is “Shukran”

70

http://www.cyborlink.com/besite/uae.htm 71


http://www.usuaebusiness.org/index.cfm?fuseaction=section.home&id=61 73


http://www.cyborlink.com/besite/uae.htm




“Inshallah” means ‘God willing’ and is a common response when agreeing on next steps or a

particular course of action.

Saying "Bismillah" (in the name of God) before eating and drinking.

Saying "Alhamdulillah" (all gratitude is for only God) when sneezing and responding with

"Yarhamukallah" (God have mercy on you).

Business Travels

Police

For police matters, contact the Dubai (http://www.dubaipolice.gov.ae/) or Abu Dhabi

(www.adpolice.gov.ae/en/) police. The UAE police force have had problems with corruption, and

government officials have been trying to address this issue.74 The emergency number is 999.75

Entering the UAE

US citizens must present a valid passport at the port of entry as well as a 14-day transit visa or 30-day

tourist visa. Visas are easy obtainable except for Israeli nationals or visitors with Israeli stamped

passports. Your luggage may be searched by customs for illegal or offensive material.76

Visas and expenses

One year work visas cost around $3,000. Investor visas cost $450-$1,500 and are valid for 3 years. Note

that 7-8 days are required for visa stamping. The authorities have slashed 6-month work permit fees and

employment fees (now around $100) by up to 95% in 2011. Fees for hiring Emiratis and CCG-nationals

have been completely removed. Overall expatriate expenses are comparable to Western countries. The

housing expenses are around $7,000 per accommodation (studio flat) and a car cost around $18,000 for

a medium size vehicle. Food and accommodation costs are generally higher, whereas cars and

electronics are cheaper.77

Entertainment

Abu Dhabi and Dubai has a lot to offer the business traveler. Leisure activities include health clubs and

spas, desert safaris, motor racing, golf, horseback riding, ice skating, skiing, sandbording, water sports,

yachting, and as spectator you could watch all classical British sports and most forms of motor racing.

The UAE also has world-class shopping (the world’s largest mall, Dubai Mall, with 1,200 stores), and very

generous tax-free rules. Dubai was the 8th most visited city in the world in 2007. Abu Dhabi has fewer

attractions, but is lusher than Dubai and offers more traditional culture.78 Although the official picture is

a promiscuous one; Dubai is unofficially known as the party and prostitution capital of the Middle East.

Mainly Russians and other Middle eastern come to Dubai to party.79

74

http://gulfnews.com/news/gulf/uae/general/dubai-police-chief-promises-zero-tolerance-on-corruption-1.523573 75

http://travel.state.gov/travel/cis_pa_tw/cis/cis_1050.html#crime 76

http://www.asiatravel.com/uae/visa.html 77

http://www.freezonesuae.com/faqs.htm 78

Terry Carter, Lara Dunston: Dubai 79

http://www.escapeartist.com/efam/58/Nightlife_in_Dubai.html

http://www.dubaipolice.gov.ae/

http://www.adpolice.gov.ae/en/

http://gulfnews.com/news/gulf/uae/general/dubai-police-chief-promises-zero-tolerance-on-corruption-1.523573


http://travel.state.gov/travel/cis_pa_tw/cis/cis_1050.html#crime

http://www.asiatravel.com/uae/visa.html

http://www.freezonesuae.com/faqs.htm



Import and Export Procedures

Tariffs and Import Taxes

GCC states formally implemented a single import tariff of 5 percent (calculated on CIF value) on most

goods January 1, 2003. Companies located in multiple Free Zones are exempt from the tariff on imports

and re-exports that do not leave the zones.

Import Licenses and Trade Barriers

Before you import goods to the United Arab Emirates you should find out what rules apply to your

particular goods. In order to import certain commodities, e.g. foodstuffs or textiles, you may have to

present a permit or a health certificate. Other examples of goods for which permits are required are

arms, hypodermic syringes and needles, animals and plants of endangered species, wine and spirits.80

An import license is generally not required unless a place of business is set up in the UAE. In other

words, foreign businesses exporting to the UAE but without a regular or continuing business presence in

the UAE do not need a license. Licenses available include trade licenses, industrial licenses, service

licenses, professional licenses, and construction licenses. In order to do business in the UAE outside of

one of the free zones, a foreign business must have a UAE national sponsor, agent, or distributor in

compliance with the Commercial Agency Law. To bid on federal projects, a supplier or contractor must

either be a UAE national or a company in which UAE nationals own at least 51 percent of the share

capital. Federal tenders must be accompanied by a bid bond in the form of an unconditional bank

guarantee for five percent of the value of the bid.81

JAFZA, the Jebel Ali Free Zone in Dubai (http://www.jafza.ae/), managing authority authorizes three

types of licenses: a general license, a specific license, and a national industrial license. The licenses are

valid while a company holds a current lease from the free zone authority and are renewable annually as

long as the lease is in force. The special license is issued to companies incorporated, or otherwise legally

established, within the free zone or outside the UAE. In such cases, no other license is required, and the

ownership of the company may be 100 percent foreign. A company with a special license can only

operate in the JAFZA or outside the UAE, but business can be undertaken and sales made in the UAE

through or to a company holding a valid Dubai Economic Department license. However, a company with

a special license can purchase goods or services from within the UAE.82

Parallel Import

The UAE is trying to address piracy, and is the most active Middle Eastern country in this regard. In 2009,

6 foreign nationals were jailed due to illegal parallel import of DVDs, this was the first case were parallel

import lead to a conviction in the Middle East. But the grey market in the UAE is still huge, and customs

controls somewhat lax.83

80

http://www.schumachercargo.com/articles/shipping-to-uae.html 81

http://fedex.com/us/international/irc/profiles/irc_ae_profile.html#C09 82


http://www.english.globalarabnetwork.com/200910123115/Related-news-from-UAE/uae-sees-first-imprisonment-for-parallel-imports-in-the-middle-east.html


http://www.schumachercargo.com/articles/shipping-to-uae.html

http://fedex.com/us/international/irc/profiles/irc_ae_profile.html#C09





Import Documentation

The documents required from the exporter include a commercial invoice, a bill of lading, and other

special certifications as may be necessary. There are no stipulations as to the form of commercial

invoices, bills of lading, or other shipping documents. Goods that are liable to duty and are shipped on

consignment should be accompanied by an invoice as though they had been sold. Shipping documents

may be made out in the English language. The standard bill of lading (or an airway bill) suffices for

shipment to the UAE. The exact process can be found at: http://new.dubaitrade.ae/en/knowledge-

centre/processes-a-procedures/216-diagram-of-import-process-for-dtp.

Labeling and Marking

Labeling and marketing requirements are only applicable for food products.84

Corruption

There is no evidence that corruption of public officials is a systemic problem; however, in 2008, UAE

authorities investigated several high-profile corruption cases. Several senior Emirati and foreign

nationals were dismissed and detained. The UAE has signed the UN anti-corruption convention.85

Standards The UAE uses the metric system and products for sale in the UAE should be adapted to it whenever

possible. U.S. exporters not using the metric system have a disadvantage in world markets since

overseas buyers are reluctant to accept products that are non-metric. Electronic equipment also runs on

different voltage (220V instead of US 120V) and electrical frequency (50 Hz instead of U.S. 60 Hz).86

Intellectual Property Rights The UAE government continues to lead the region in protecting intellectual property rights (IPR).

Although the UAE is the leader in the region at enforcing intellectual property rights and the Emirate of

Dubai is very pro-active in enforcement, many stakeholders believe that the government could do more

to fight piracy in the other emirates and to deal with the problems of transshipping of counterfeit goods.

In 2008, the UAE launched several campaigns against piracy and seized and destroyed thousands of

pirated auto spare parts, perfumes, air fresheners, electrical devices, sport equipment, medicines,

movies and music discs. The value of seized pirated goods in 2007 amounted around $800 million. The

UAE's Trademark Law, issued in July 2002, confirms that the UAE will follow the International

Classification System and that one trademark can be registered in a number of classes. The law provides

that the owner of the registration shall enjoy exclusive rights to the use of the trademark as registered

and can prevent others from using an identical or similar mark on similar, identical or related products

and services if it causes confusion among consumers.87

84

http://www.globaltrade.net/international-trade-import-exports/f/business/text/United-Arab-Emirates/Legal-and-Compliance-Labeling-and-Marking-Requirements-in-U.A.E.html 85


http://metricviews.org.uk/2010/01/will-the-european-commission-challenge-us-labelling-rules/ 87


http://new.dubaitrade.ae/en/knowledge-centre/processes-a-procedures/216-diagram-of-import-process-for-dtp

http://new.dubaitrade.ae/en/knowledge-centre/processes-a-procedures/216-diagram-of-import-process-for-dtp

http://www.globaltrade.net/international-trade-import-exports/f/business/text/United-Arab-Emirates/Legal-and-Compliance-Labeling-and-Marking-Requirements-in-U.A.E.html



http://metricviews.org.uk/2010/01/will-the-european-commission-challenge-us-labelling-rules/



Sales & Marketing The commercial tradition of the UAE is that of the middleman or trader acting as a conduit for goods

from large manufacturers to South Asia, the Gulf, and East Africa. Today, with Dubai emerging as the

hub of the Gulf, the UAE still serves those traditional markets along with those of North, South, West,

and Central Africa, and the rest of the Middle East. The business style prevalent is one that puts an

emphasis on personal relationships and perceptions of integrity. Traditional approaches to business are

beginning to change. There is a growing emphasis on quality, after-sales service, and maintenance

requirements and costs. A new trend of impersonal businessman/consumer has changed some of the

business style. However, it does not yet represent the dominant practice. Personal relationships,

particularly when UAE nationals are involved, still predominate. Since these relationships take time to

nurture, U.S. firms are advised to invest time in the market with preferably a local presence or at least

very frequent trips. This is not an activity that can be done long-distance. Face-to-face contact is

essential. In addition, U.S. firms should seek a local sponsor, agent, or partner with sufficient access and

influence in those circles most relevant to that particular business. In addition to personal relationships,

price remains most often the dominant-buying factor. For U.S. firms selling to traders, which are the

dominant business type in the UAE, there is no substitute for price. Government procurement also

places heavy emphasis on selection of the low bidder, as long as the lowest price bidder is compliant

with all technical specifications. Even though the UAE is relatively less conservative than some other Gulf

States and English is widely spoken, sensitivity to local traditions and Islamic beliefs is essential. The use

of Arabic in packaging and advertising is both desirable and effective (and sometimes mandatory) in

marketing consumer goods. U.S. manufacturers and exporters enjoy an excellent reputation for product

technology, quality and durability and the U.S. market share is expected to increase. U.S. companies

face tough competition from European and Asian companies in the UAE, who generally have a larger

presence in the region and/or offer comparable products and services at very competitive prices.

Providing after-sale maintenance services is essential and U.S. companies are advised to establish a

presence in the UAE to be able to compete. In general, U.S. companies with a manufacturing presence in

the UAE or in any of the GCC countries are most likely to be able to compete in the UAE market, given

the relatively low cost of production compared to other places.88

88



Organizations and Information Sources Dubai World Trade Center (http://www.dwtc.com/)

Abu Dhabi World Trade Center (http://www.wtcad.com/)

Dubai Customs (www.dxbcustoms.gov.ae)

Abu Dhabi Customs (www.auhcustoms.gov.ae)

Emirates Authority for Standardization and Metrology (ESMA) P.O. Box 2166, Abu Dhabi, UAE,

Phone: +971 2 671 1110, Fax: +971 2 671 5999, Email: [email protected] Contact: Mr. Walid Bin

Falah Al Mansouri, Director General

Emirates Standardization Department P.O. Box 2166, Dubai, UAE, Phone: +971 2 676 3743, Fax:

+971 2 671 5999, Email: [email protected], Contact: Mr. Ali Omar, Director

Emirates National Accreditation system (ENAS) P.O. Box 48666, Dubai, UAE, Phone: +971 4 295

1737, Fax: +971 4 294 4428, Email: [email protected], Contact: Mr. Abdula Hamid Alwan,

Director

Emirates Conformity & Assessment Scheme P.O. Box 48666, Dubai, UAE, Phone: +971 4 295

1626, Fax: +971 4 294 4428, Email: [email protected], Contact: Eng. Basim Zayer

US Department of Commerce (http://www.buyusa.gov/uae/en/) has extensive information on

trade and also facilitates contacts with UAE organizations.

US Embassy in Abu Dhabi (http://uae.usembassy.gov/)

Senior Commercial Officer: Christian Reed, US Embassy, Commercial Section, P.O. Box 4009, Abu

Dhabi, Tel: (971-2) 414-2665, Fax: (971-2) 414-2228, E-mail: [email protected]

US Consulate in Dubai (http://dubai.usconsulate.gov/)

US Department of Commerce (http://www.buyusa.gov/uae/en/)

US Government Trade Related Contacts in Washington, D.C.

UAE Desk Officer: Tyler Hoffman, International Trade Administration, US Department of

Commerce, 14th St. & Constitution Avenue, N.W., Washington, D.C. 20230-0001

Tel: (202) 482-3742, Fax: (202) 482-0878, Email: [email protected]

UAE Embassy in US (http://www.uae-embassy.org)

1255 22nd Street, N.W., Suite 700, Washington, D.C. 20037, Tel: 202-243-2400,

Fax: 202-243-2432

Abu Dhabi C.O.C. (http://www.abudhabichamber.ae/English/Pages/Default.aspx)

National US Arab Chamber of Commerce (http://www.nusacc.org/)

1100 New York Ave., N.W., East Tower, Suite 550, Washington, D.C. 20005, Tel: 202-289-5920

Fax: 202-289-5938, Email: [email protected]

American Business Council of the Gulf Countries (ABCGC) (http://www.abcgc.us)

52 Court Street, Plymouth MA 02360, Ph:(508) 732-8920, Fax. (508) 732-8919

The American Business Council of Dubai and Northern Emirates (www.abcdubai.com)

P.O. Box 37068, Dubai, UAE, Tel: 971-4-340-7566; Fax: 971-4-340 -7565,

Email: [email protected]

The American Business Group of Abu Dhabi (www.abg-ad.com)

P.O. Box 43710, Abu Dhabi, UAE, Tel: 971-2-671-1141; Fax: 971-2-671-1017,


http://www.dwtc.com/

http://www.wtcad.com/

http://www.dxbcustoms.gov.ae/

http://www.auhcustoms.gov.ae/

mailto:[email protected]




http://www.buyusa.gov/uae/en/

http://uae.usembassy.gov/


http://dubai.usconsulate.gov/

http://www.buyusa.gov/uae/en/


http://www.uae-embassy.org/

http://www.abudhabichamber.ae/English/Pages/Default.aspx

http://www.nusacc.org/


http://www.abcgc.us/

http://www.abcdubai.com/


http://www.abg-ad.com/



Federation Chamber of Commerce & Industry (http://www.fcci.gov.ae/)

P.O. Box 3014, Abu Dhabi, UAE, Tel: 971-2- 621-4144; Fax: 971-2-633-9210,


Abu Dhabi Chamber of Commerce & Industry (www.adcci-uae.com)

P.O. Box 662, Abu Dhabi, UAE, Tel: 971-2-621-4000, Fax: 971-2-621-5867,


Dubai Chamber of Commerce & Industry (www.dubaichamber.ae)

P.O. Box 1457, Dubai, UAE, Tel: 971-4-228-0000; Fax: 971-4-221-1646,


Sharjah Chamber of Commerce & Industry (www.sharjah.gov.ae)

P.O. Box 580, Sharjah, UAE, Tel: 971-6-554-1444; Fax: 971-6-554-1119,

Email: [email protected],

Ajman Chamber of Commerce & Industry (http://www.ajcci.co.ae)

P.O. Box 662, Ajman, UAE, Tel. 971-6-742-2177, Fax. 971-6-742-7591,


Fujairah Chamber of Commerce, Industry & Agriculture (http://fujairahchamber-uae.com)

P.O. Box 738, Fujairah, UAE, Tel. 971-9-222-2400, Fax. 971-9-222-1464,


Ras Al Khaimah Chamber of Commerce, Industry & Agriculture (http://www.rakchamber.com)

P.O. Box 87, Ras Al Khaimah, UAE, Tel. 971-7-233-3511, Fax. 971-7-233-0233,


Umm Al Quwain Chamber of Commerce & Industry

P.O. Box 436, Umm Al Quwain, UAE, Tel. 971-6-765-1111, Fax. 971-6-765-5055,


Ministry of Environment & Water (http://www.moew.gov.ae)

P.O. Box 213, Abu Dhabi, UAE, Tel. 971-2-449 5111, Fax. 971-2-449 5154,


Ministry of Finance & Industry (http://www.uae.gov.ae/mofi)

P.O. Box 433, Abu Dhabi, UAE, Tel. 971-2-672-600, Fax. 971-2-6768414,


Abu Dhabi Council for Economic Development(ADCED)

P.O. Box 126666, Abu Dhabi, UAE, Tel: 971-2-691 3300, Fax. 971-2-691 3400,


Abu Dhabi Water & Electricity Authority (http://www.adwea.gov.ae/)

P.O. Box 422, Abu Dhabi, UAE, Tel. 971-2-694-3333, Fax. 971-2-694-3491

Environment Agency – Abu Dhabi (http://www.ead.ae)

P.O. Box 4553, Abu Dhabi, UAE, Tel. 971-2- 681 7171, Fax. 971-2-681 008

Dubai Electricity & Water Authority (http://www.dewa.gov.ae)

P.O. Box 564, Dubai, UAE, Tel. 971-4-324-4444, Fax. 971-4-324-8111

Sharjah Electricity & Water (http://www.sewa.gov.ae)

P.O. Box 135, Sharjah, UAE, Tel. 971-6-528-8888, Fax. 971-6-528-8000

http://www.fcci.gov.ae/


http://www.adcci-uae.com/


http://www.dubaichamber.ae/


http://www.sharjah.gov.ae/


http://www.ajcci.co.ae/


http://fujairahchamber-uae.com/


http://www.rakchamber.com/



http://www.moew.gov.ae/


http://www.uae.gov.ae/mofi



http://www.adwea.gov.ae/

http://www.ead.ae/

http://www.dewa.gov.ae/

http://www.sewa.gov.ae/


Fairs and Trade Shows 2nd Annual Arab Investment Summit 2011 (http://www.invsummits.com/home.html)

U.S. Governments’ trade missions (http://www.export.gov/tradeevents/index.asp)

UAE trade show list for 2011 (http://www.biztradeshows.com/unitedarabemirates/)

UAE trade show list for 2011 (http://www.eventseye.com/fairs/c1_trade-shows_uae-united-

arab-emirates.html)

UAE trade show list for 2011 (http://www.buyusa.gov/uae/en/19.html)

5-10 June 2011 official trade mission focus on transportation, energy, and infrastructure

(http://trade.gov/trade-missions/mission-statements/transportation-and-energy-products-and-

services-trade-mission-to-qatar-and-uae-june2011.asp)

http://www.invsummits.com/home.html

http://www.export.gov/tradeevents/index.asp

http://www.biztradeshows.com/unitedarabemirates/

http://www.eventseye.com/fairs/c1_trade-shows_uae-united-arab-emirates.html

http://www.eventseye.com/fairs/c1_trade-shows_uae-united-arab-emirates.html

http://www.buyusa.gov/uae/en/19.html

http://trade.gov/trade-missions/mission-statements/transportation-and-energy-products-and-services-trade-mission-to-qatar-and-uae-june2011.asp

http://trade.gov/trade-missions/mission-statements/transportation-and-energy-products-and-services-trade-mission-to-qatar-and-uae-june2011.asp


Market Entry Strategies

Market entry and administrative procedures are a streamlined process in the UAE. A City Mayors survey

rated Dubai as 44th among the world's best financial cities in 2007. Dubai has ranked 1st in the Middle

East in the Worldwide Centers of Commerce Index. The World Bank’s 2011 ranking for ease of doing

business ranks the UAE nr 40 in the world (down from nr 37 in 2010):

The UAE on the other hand scores poorly on investor protection, financing, and contract enforcement.89

Setting up a company in a Free Trade Zone (FTZ)

The Free Zone Authority (www.jafza.ae/) assesses a company’s requirements and their feasibility for

starting a company in a through a questionnaire and a duly filled in license application is to be

submitted. Provisional approval is given along with a specimen lease agreement; personnel documents

for the license requirement are submitted. After the meeting of the company representative and the

concerned authority to finalize the details of the project, actual documents are processed. A limited

liability companies is restricted to trading and industrial activities, and civil business companies are

established for practicing professional activities.90

Recruitment

There are a large number of employment agencies, recruitment

agencies, consultants and job agencies in the UAE, primarily online. A

few of the larger and more well-known job search firms operating in

Dubai include BAC Middle East, Clarendon Parker, IQ Selection,

Kershaw Leonard and SOS Recruitment.

89

http://www.doingbusiness.org/rankings 90

http://www.rhsgroup.com/rhs_business_division/faq.htm

0 20 40 60 80 100 120 140 160

Ease of Doing Business Rank

Starting a Business

Dealing with Construction Permits

Registering Property

Getting Credit

Protecting Investors

Paying Taxes

Trading Across Borders

Enforcing Contracts

Closing a Business

U.S.

UAE

Top internet recruitment agencies websites

Bayt.com

Dubaidonkey.com

Gulftalent.com

Jobsindubai.com

Dubizzle.com

Jobtrackme.com

Mawaride.com

Monster.com

Strategiy.com

Jobs.theemiratesnetwork.com

Classified ads

Gulf News www.gulfnews.com/

Khaleej Times www.khaleejtimes.com/


http://www.doingbusiness.org/rankings



Distribution

The UAE, and especially Dubai, is a global distribution hub. The UAE has perhaps the world’s most

developed logistics capabilities. Airports and ports in Dubai and Abu Dhabi have vast connections to the

entire globe. The airline companies Emirates Airlines (Dubai) and Etihad Airlines (Abu Dhabi) are both

backed with huge resources by their respective emirate. Emirates Airlines is among the world’s largest.

All global logistics companies operate in the UAE, and comprehensive listing of local distributors can be

found at: http://www.indexuae.com/Top/Business_and_Economy/Services/Distributors/1.

Agents

The UAE legal system distinguishes between the two forms of commercial agents- the registered and the

unregistered commercial agent. Local companies prefer to work as registered agents for the law favors

this arrangement. On occasion, local companies will accept to go the unregistered way based on good

faith, but almost always prefer exclusivity. UAE law does not distinguish between an agent and

distributor, referring to both as commercial agents. The Ministry of Economy and Commerce handles

registration of commercial agents. Selection of the right agent continues to be an important decision.

The best protection is serious research and due diligence prior to embarking on an agreement.

Agreements with registered agents are not easily terminated, except with sufficient cause as

determined by a government committee that has historically ruled in favor of the local agent. In most

cases, compensation to a terminated agent is required even if the committee rules for the foreign firm.

Only UAE nationals or companies wholly owned by UAE nationals can register with the Ministry of

Economy and Commerce as local agents. The D.O.C. offers a matching service

(http://www.export.gov/salesandmarketing/eg_main_018195.asp).91

Joint Ventures and Licensing

In a joint venture profit and loss distribution can be arranged as desired even though UAE majority

ownership is mandatory. Licensing of manufacturing processes is a growing market, especially with the

UAE's desire to increase the quality and diversity of local production. The total market for industrial

licenses remains relatively small due to the limited manufacturing done in the UAE. The majority of

licensing in the UAE is done for fabricating and/or marketing of trademarked items.

91


http://www.indexuae.com/Top/Business_and_Economy/Services/Distributors/1

http://www.export.gov/salesandmarketing/eg_main_018195.asp


UAE Water Industry

This part of the report is a contemporary description of the United Arab Emirates (UAE) water industry.

That roughly includes water resource management, irrigation services, water supply and sanitation

services. According to a World Bank report, the Middle East has five percent of the world's population

but only one percent of the water. The consulting firm Research and Markets estimate that over US$

250 billion will be invested in the Gulf Cooperative Council (GCC) countries’ water and desalination

projects, over the next 10 years. Water shortages are an ongoing concern. The UAE has very limited

rainfall or groundwater but the world’s third largest per capita water consumer (550 liters per person

per day) after the U.S. and Canada; in part a reflection of the subsidized prices that Emiratis pay. Peak

water demand in Abu Dhabi is estimated to be around 690m gallons/day (gal/d). In Dubai peak demand

for desalinated water stood at 239m gal/d compared with a production capacity of 278m gal/d.

Groundwater wells in Dubai can only provide about 36m gal/d.92 Officials estimate that the emirate’s

total consumption of water resources exceeds at least 25 times its natural recharge capacity. Dubai had

a 6% month-on-month increase in water consumption in the summer of 2010.

Conversion Measures

1 m3 = 220 Imperial Gallons (IG) 1 Ha = 2.47 Acres

1 IG = 0.0045 m3 1 Acre = 0.405 Ha

1 m3 = 264 Gallons (G) 1 Liter = 0.264 Gallons

1 G = 0.0038 m3 1 G = 3.785 Liters

1 IG = 1.2 G 1 IG = 4.54 Liters

Abbreviations and Acronyms

ADWEA Abu Dhabi Water and Electricity Authority STP Sewerage Treatment Plant

ADWEC Abu Dhabi Water and Electricity Company

DEWA Dubai Electricity and Water Authority

ENG Emirates’ National Grid

FEWA Federal Electricity and Water Authority

IWPP Integrated Water & Power Plant

SEWA Sharjah Electricity and Water Authority

SWCC Saline Water Conversion Corporation

92

Economist Intelligence Unit: UAE Country Report


Quick Facts Some basic figures for the UAE water segment:

Indicator UAE MENA Source

Socioeconomic indicators

Population with access to improved drinking water (%), 2002 100 90 UNICEF-WHO database

- Urban 100 96 UNICEF-WHO database

- Rural 100 81 UNICEF-WHO database

Percentage of population with access to improved sanitation, 2002 100 76 UNICEF-WHO database

- Urban 100 90 UNICEF-WHO database

- Rural 100 57 UNICEF-WHO database

Water Resources

Average precipitation (mm/yr), 1998–2002 78.0 181.6 FAO AQUASTAT

Internal water resources FAO AQUASTAT

- Surface water (1,000 million m3) 0.2 153.1 FAO AQUASTAT

- Ground water (1,000 million m3) 0.1 77.2 FAO AQUASTAT

Total internal water resources (1,000 million m3) 0.2 198.7 FAO AQUASTAT

Total external water resources (1,000 million m3) 0.0 85.5 FAO AQUASTAT

Total renewable water resources (1,000 million m3) 0.2 284.3 FAO AQUASTAT

Per capita renewable water resources available (1,000 million m3) 0.1 1.1 FAO AQUASTAT

Total renewable water resources (as % of total water use) 6.5 133.0 FAO AQUASTAT

Water Withdrawls, 2002

Agricultural (1,000 million m3) 1.6 188.3 FAO AQUASTAT

Domestic (1,000 million m3) 0.5 17.5 FAO AQUASTAT

Industrial (1,000 million m3) 0.2 7.9 FAO AQUASTAT

Total (1,000 million m3) 2.3 213.8 FAO AQUASTAT

Virtual Water

Virtual water imports in crops (1,000 million m3) 1.7 57.8 Chapagain and Hoekstra 2003

Virtual water imports in livestock (1,000 million m3) 2.5 14.4 Chapagain and Hoekstra 2003

Total virtual water (1,000 million m3) 4.2 74.4 Chapagain and Hoekstra 2003

Supplemental (desalinated and retreated and reused (1,000 million m3) 0.6 4.8 Chapagain and Hoekstra 2003

Water scarcity (%) 1,488.20 - Chapagain and Hoekstra 2003

Water self-sufficiency (%) 35 - Chapagain and Hoekstra 2003

Water dependency (%) 65 - Chapagain and Hoekstra 2003


Water in the UAE In the UAE, supply of water usually comes from desalinated water and water wells. There has also been

an increase in wastewater treatment facilities. Groundwater has traditionally sustained families,

livestock and farms through wells that lead into spring-fed aflaj irrigation systems. In 2003 the current

Ministry of Environment and Water reported that 76,556 wells were in use throughout the UAE. Many

of the wells and springs that bring up the ancient water deep beneath the earth have run dry over time.

Aquifers - which are an underground layer of water-bearing permeable rock or unconsolidated materials

- are being emptied of their natural fresh water. The usage by sector in the Abu Dhabi Emirate is 83

percent used for irrigation (agriculture, forestry and amenities), 15 percent for public purposes and less

than 2 percent for industrial purposes. To save water the government has constructed 114 dams to

store a capacity of 118 million cubic meters of water. It is estimated that 19.2 million cubic meters of

water per year is needed to feed the aquifers with fresh water. Desalination produces 1.3 billion cubic

meters of fresh water to meet the needs of the population and industry. Around 400 million cubic

meters of water is produced from treated grey-water to irrigate parks.

The UAE’s heavy depletion of natural aquifers has forced it to use alternative methods of accumulating

water. In the UAE as a whole, desalinated water accounts for 80% of total water consumption and the

UAE produces 14% of global desalinated water. The UAE has emerged as the Middle East and North

Africa (MENA) regions second largest producer of desalinated water, after Saudi Arabia. Other

alternative methods to increase the groundwater recharge, is the construction of dams. There are

currently about 35 dams and embankments throughout the UAE region with a total storage capacity of

80 million m³. While most of these dams are basically built for recharging purposes, they also provide

protection against damage caused by flash floods.

Abu Dhabi’s water consumption is increasing at a rapid rate, Abu Dhabi Water and Electricity Company

(ADWEC) notes that water demand increased annually by 8.1% in 2009. The company is anticipating

robust long-term demand growth, with 2015 demand expected to reach 1.06bn g/d, rising to 1.28bn g/d

by 2025. There has been an increasing insight among UAE and Emirate water sector officials that

increased supply is not enough. Recently efforts have been made to promote reduced water usage

among residents. The Emirates Wildlife Society in association with the World Wide Fund for Nature has

launched a water campaign urging residents to adopt simple tips to reduce their water wastage; just a

few simple changes could save each household up to 46 per cent, or 252 liters of water per person. In

June 2010, Abu Dhabi’s main water regulator, the Regulation and Supervision Bureau (RSB), announced

new trade effluent control regulations aimed at controlling effluent and boosting recycling of water.

Companies will now face restrictions on the amount of wastewater they can discharge. Another area

where Abu Dhabi is focusing resources is in the storage of desalinated water, through the optimization

of the existing water supply network and fostering storage. The award of a new $430 million contract to

a Lebanese/Korean consortium in late 2010 to build a major storage facility in Liwa is a sign of this new

strategic push. In the Western Region, where Liwa is located, the aim is pump large volumes of

desalinated water into the aquifer. Similarly in Dubai, construction is under way of a potable water

reservoir in Mushrif with a 415 million gallon capacity.


Groundwater Today, fresh water is available only after 100 meters below ground level. Groundwater in the UAE is fast

depleting because of prolonged drought conditions. About 80,000 wells including 13,000 in Abu Dhabi

and 12,000 in Sharjah are at

the risk of depletion and

comprise high salinity,

according to a scientific study

conducted by the UAE

University. About 40 per cent

of wells in Fujairah and other

Eastern Region are also

affected, reported the 'Al

Ittihad' newspaper. It is

believed that scanty rainfall

compared to previous years

was the main reason for water

depletion. Earlier, fresh water

was available at six meters below ground level. As the UAE progressed, many industries and iron and

steel plants also cropped up, which added pressure on the strategic reserve. Similarly, farmers have not

changed to modern irrigation methods which can conserve and save water to a larger extend.

Meanwhile, Abu Dhabi Food Control Authority (ADFCA) has warned of water shortage in 50 years if

consumption by agricultural sector in the UAE continues at this pace without steps taken to conserve

groundwater. The farms consume about 1.5 billion cubic meters of water annually, accounting for 52 per

cent of total water consumption, according to the ADFCA. Water renewal is less than four per cent

annually, which is a major challenge for the agricultural sector in Abu Dhabi, especially as rainfall does

not exceed 100mm per year. ADFCA said it plans to educate farmers on reduced use of water so as to

rationalize consumption in the next two years. About 95 per cent of farmers in Abu Dhabi depend on

well water, while fresh water does not exceed one per cent, and not to mention the high rates of

nitrates in the wells, ADFCA added. Irrigation efficiency in most of the farms is 30 per cent only because

of wrong irrigation practices. There have been no incentives for farmers to change their irrigation

practices either, as water has long been subsidized. ADFCA confirmed it aims to bring about a major

shift in the agricultural sector in the emirate by 2013, a plan that includes environmental, social and

economic development, apart from actively taking steps to help farmer rationalize water consumption.

It said lack of cultivation of Rhodes grass in the Western Region would reduce water consumption for

irrigation by more than 17 per cent at the emirate level. Of the total 23,682 farms, the cultivated area is

61,000 hectares.93

93

http://www.emirates247.com/news/emirates/groundwater-in-uae-depleting-fast-2010-10-24-1.308029

http://www.emirates247.com/news/emirates/groundwater-in-uae-depleting-fast-2010-10-24-1.308029


Current Financial Situation In a positive sign of growing confidence in the Dubai Inc government-owned corporation (GOC), DEWA

issued a $1.0 billion five-year bond, the first greenback-denominated benchmark offering completed by

a Dubai corporate since 2008 and the first time a Dubai parastatal has tapped the debt capital market

since the Dubai World restructuring late in 2009. DEWA was reported, in Q3 2009, to be seeking a new

loan in excess ofUS$1.0 bn., backed by export credit agencies. DEWA will stagger its developments as

the emirate faced a sharp fall in expatriate population numbers in 2009-2010. In order to speed up

project activity, in June 2009 DEWA sanctioned a cut in the bid bond for tenders exceeding $500 million,

bringing it down from 5% to 2%. It also lowered the performance guarantee bond from 20% to 10%.

Despite Abu Dhabi’s successful deployment of private-led development models, Dubai, Sharjah and the

northern emirates have yet to adopt the IWPP template. However, in Q407 the government made the

first moves to open up the northern emirates’ power and water sectors to private investment.

Two of the largest projects that have been established in the UAE are the Jebel Ali sewerage treatment

project and the Ajman sewerage plant project, with a combined project value of $340 million. Today’s

much weaker economic climate, poor investment flows and lower demand has resulted in delays and

downscaling of projects, most notably in cash-strapped

Dubai, but also, to some extent, in Abu Dhabi. This has raised

fears among investors that some emirates might consider

greater nationalization of the industry if major privately

financed water projects encountered further delays.

However, the success of some recent projects that had

struggled to find funding initially, and signs of recovery in the

global economy seems to have allayed such concerns for the

moment. Dubai will proceed with its Hassyan 1 scheme as an

IWPP, confirming that the tough economic climate could

prove to be a trigger for economic reform.94 Work at Jebel Ali Sewage Treatment

Plant

The financial crisis and weak economic conditions have decreased demand and credit lines, which at

one point threatened to force Abu Dhabi authorities to nationalize the whole water sector if the

privately financed water projects had experienced further delays. But the recent rise in oil prices has put

the UAE economy back on solid ground. Dubai has been hit hardest by the global economic downturn

and the clutch of real estate developers that have driven the expansion of the states mega projects are

now delaying, scrapping or downsizing their various schemes. The three major credit agencies

downgraded DEWA to junk bond status due to uncertainty over the Dubai government’s ability to

support state-linked companies. In November 2010 Standard & Poor’s upgraded DEWA to BBB minus,

the lowest investment grade status. The upgrade was due to a 2010 first-half result that was above

expectations as well as DEWA’s improved liquidity.95

94

http://www.zawya.com/projects/project.cfm/pid200307102504?cc 95

http://www.thenational.ae/business/energy/s-p-raises-dewa-bond-issue-rating

http://www.zawya.com/projects/project.cfm/pid200307102504?cc

http://www.thenational.ae/business/energy/s-p-raises-dewa-bond-issue-rating


Government & Privatization The UAE’s water sector is organized along federal lines. Abu Dhabi Water & Electricity Authority

(ADWEA) is the utility responsible for the supply of water in Abu Dhabi. In Dubai, Dubai Electricity &

Water Authority (DEWA) operates the water and electricity sector. Sharjah Electricity & Water Authority

(SEWA) is the authority with responsibility for the small emirate’s water and power supply. For the four

northern emirates – Ajman, Fujairah, Ras al-Khaimah and Umm al-Quwain, a single authority, the

Federal Electricity & Water Authority (FEWA), is the water and power provider. ADWEA has also been

the most active promoter of privatized water provision, with a series of independent water projects;

ADWEA has built at least one new IWPP every year, besides expanding facilities. Despite Abu Dhabi’s

successful deployment of private-led development models, Dubai, Sharjah and the northern emirates

have yet to adopt the privatized project model. It has been hinted the Dubai government will soon issue

two decrees that will end DEWA’s monopoly and allow private companies into the industry. Whilst

Privatization occupies the centre stage in the overhauling process of the power and water sector, the

initiatives towards alternative energy sources in the form of solar and nuclear power has been

considered a highlight of the regional power reforms.

Water Consumption With the extremely high levels of water consumption, integrated management of water resources and

on regulation rather than provision of services has been identified by local officials as more prudent. The

UAE has seen some major advances, but on the whole, progress toward better management has been

slow. Indeed, most countries in the world share the problem. Why has progress been so slow? One

important reason is that countries have delayed tackling many important water reforms, such as

reducing subsidies that encourage inefficient water use. Cheap drilling techniques, huge public sector

projects that dammed and tapped into aquifers, and extensive irrigation have reduced renewable water

resources and groundwater. Policies outside the water sector give farmers and businesses little

incentive to use water well; it is not possible to tackle the problem through water sector reforms alone,

all sectors and the whole water-cycle must be considered. For example, cropping choices are a key

determinant of water use in agriculture (which accounts for some 85 percent of the MENA-regions

water use) and they are affected far more by the price the farmer can get for those crops than by the

price of irrigation services, which is typically a very small share of a farmer’s costs.96

96

The World Bank: Making the Most of Scarcity- Accountability for Better Water Management Results in MENA


UAE Water Industry The UAE production of water is approximately 510 million gallons per day of which 80 percent is

desalinated seawater. An estimated $5.0 billion will be spent on improving water resources in the

coming years because the need for water in general and desalinated water in particular, will triple to

713 million gallons per day by the year 2015. With Dubai’s water and power utility (DEWA) looking to

follow ADWEA’s private financing lead, the UAE’s water sector stands an increased chance of attracting

the kind of funding needed to meet the sharp uptick in demand that is expected over the next decade.

Though the economic recession bit a chunk out of the country’s demand in 2008-2010, the historic trend

is expected to resume with more vigor over the next four years. For 2011, a 7.4% increase in production

is expected, a substantial increase on the previous year. By 2014, an additional 200mn g/d of water is

expected to be in the UAE system – the bulk of this new supply emanating from the expanded array of

IWPPs from the ADWEA stable.97

Desalinization The UAE is the Middle East and North Africa’s second-largest producer of desalinated water. The very

energy intense desalinization process means a close linkage with energy supply in the UAE. The UAE in

fact also has one of the fastest growing electricity sectors in the world. Electricity generation doubled

between 1995 and 2003, reaching 50 terawatt/hour (TWh). The per capita electricity generation, in

excess of 12,000 kilowatt-hours (kWh) is higher than the OECD average. Natural gas fuels over 99

percent of total electricity generation, the remainder being based on oil. Electricity generation in the

UAE will continue to increase rapidly over the current decade, at 5.6 percent per year on average. Fuel

requirements for desalination are expected to raise from 9 million tons of oil equivalent (Mtoe) in 2003

to 16 Mtoe, or nearly one-fifth of total primary energy demand in 2030. Desalinization-facilities have

been built in connection to power stations. The scheduled Shuweihat S3 power plant is the first power

plant built in recent years without a desalinization component.98

In 2003, International Power (IP) announced the successful conclusion of negotiations to finance the

acquisition and expansion of the existing Umm Al Nar power and water desalination plant as part of Abu

Dhabi's power and water privatization process. The IP-led consortium, which includes Tokyo Electric

Power Company (TEPCO) and Mitsui, acquired a 40% equity interest in the facility from the Abu Dhabi

Water and Electricity Authority (ADWEA) to form a new joint venture, the Arabian Power Company

(APC). The remaining 60% of APC is owned by a holding company, itself wholly owned by ADWEA. The

consortium also signed a 'take-or-pay' power and water purchase agreement with the Abu Dhabi Water

and Electricity Company (ADWEC) to cover the entire output over a 23-year period. The new plant

became operational in 2006. The total project cost was over $2.0 billion. Funding is a mix of non-

recourse project finance debt, shareholder equity and revenue from the operation of the existing plant.

97

http://www.researchandmarkets.com/research/258b8c/united_arab_emirates_water_report_q1_2011 98

http://www.uaeinteract.com/docs/Diab_bin_Zayed_Shuweihat_S3_to_increase_electricity_production_and_raise_foreign_investments_to_Dh65_billion/40044.htm

http://www.researchandmarkets.com/research/258b8c/united_arab_emirates_water_report_q1_2011




Located on the Umm Al Nar Island, 12 miles to the east of Abu Dhabi city, the existing gas-fired plant

has an installed power generation capacity of 2,400 MW

and 170,000m³/day Multi-Stage Flash Distillation (MSF)

desalination capacity. It is the first facility in the Gulf

region to use GE's Frame F turbine technology the

GE9FA turbines. The inherent efficiency of MSF,

combined with the relatively low maintenance demand

of these plants makes them particularly suited to the

large-scale applications required in the Middle East.

Although reverse osmosis plants occur in greater

numbers, over 85% of the world's desalinated water

comes from MSF systems. Mitsui is the new plant EPC contractor, with Hitachi Zosen and Toshiba acting

as principal sub-contractors. GE Power Systems have the 23-year service contract. White & Case were

legal advisors to ADWEA during acquisition and Trowers & Hamlins acted for the IP Consortium. The

turnkey contractor for the original plant was Doosan Heavy Industries (DHI). DHI used its own

technology in the manufacture of the plant's Distribution Control System (DCS) and interface panels.

Arabian Construction Company was the civil and structural steel contractor on the original plant. The

site work, logistics and local fabrication was done by IHI UAE. Torishima supplied the pumps and Hyundi

Heavy Industry the large-capacity motors.

Wastewater Many Gulf States intend to double their spending in the wastewater sector in the coming decade. The

UAE has taken significant steps to protect the environment. These include the establishment of several

federal institutions for environmental protection, as well as adoption of programs by municipalities for

better environmental practices. One of the focal points has been wastewater management. Nearly all of

the wastewater in the Emirate of Abu Dhabi is treated. The treated water is used for landscaping or

released into the sea. Although treated sewage effluent (TSE) is generally not viewed as safe for

consumption and is often used in the UAE for landscaping, it is a potential source of water for a variety

of critical agricultural, industrial, and other uses. The cost of treated effluent is approximately $0.66 per

cubic meter (depending on its quality and on how much it costs to transport to end users) while water

from desalination costs an estimated $2.27 per cubic meter. But because of a system of tariffs and

subsidies in the UAE, economic comparisons between TSE, desalination, and groundwater are difficult to

make. Therefore, the costs of TSE fall disproportionately on its potential end-users, making TSE seem

more expensive than it really is. Officials are looking closely at TSE as part of their water strategies. They

are setting up joint ventures with private stakeholders to develop the required infrastructure, operate

and maintain the production facilities, and market the resulting water supplies. These joint ventures,

which benefit from access to low interest rates and use high-leverage project financing schemes with

debt ratios averaging 75 percent or more, can benefit from very attractive return on equity of 15

percent. 99

99

http://www.utilities-me.com/article-1059-a-renewable-resource/

http://www.utilities-me.com/article-1059-a-renewable-resource/


The Emirate of Abu Dhabi has formed Abu Dhabi Sewerage Services Company (ADSSC) with assets

valued at $2.45 billion was founded in 2005. ADSSC will be building four treatment plants to handle

increasing volumes of waste from development. An award is also pending for a program to supervise

ADSSC's $1.1billion strategic investment program to upgrade Abu Dhabi's sewers. The main component

of the program is a 45-kilometre sewer tunnel, from the northern part of Abu Dhabi Island to the

mainland. The tunnel will relieve pressure on the existing system serving Abu Dhabi Island and will allow

for the eventual removal of existing pumping stations. It is hoped the scheme will reduce operating

costs. Other works planned as part of the program involve upgrading treatment plants at Mafraq and

Zakher, and the rehabilitation and upgrading of major trunk sewers and pumping stations. The entire

scheme is expected to take seven years to complete.

Abu Dhabi’s Regulation and Supervision Bureau (RSB), has recently launched several important new

regulations aiming at controlling all non-domestic discharges into the emirate’s sewage system and

setting the standards of the recycled treated wastewater in Abu Dhabi.100 Residents of Abu Dhabi may

soon have to pay sewerage charges in addition to their water and electricity bills to offset the subsidy

coming from the government. The Drainage and Irrigation Department of Dubai Municipality has a

sewage treatment plant in the Aweer area with a capacity for treating 330,000 gallons of sewage water

per day used for irrigation of municipal parks and landscapes. The flow of effluent into this sewage

treatment plant is increasing by up to 25 percent a year. It is now handling almost twice its original

design capacity. The burden is also being increased by effluent trucked to Al-Awir from labor camps

accommodating construction workers. Dubai is building membrane-based water treatment plants to

cover the shortage. Residents of Dubai are paying sewerage charges. The Emirate of Sharjah has

awarded a $540,000 turn-key contract for the construction of a sewage treatment plant at the housing

complex within the Hamriyah Free Zone in Sharjah. This plant will be equipped to treat all sewage and

wastewater within the complex at a capacity of up to 500 c/m of waste per day. The treated water will

be later used for irrigation and landscaping. Residents of Sharjah are paying sewage charges. The

emirate of Ajman has constructed $140.2 million sewerage, through a BOT contract with Ajman

Sewerage (Pvt) Co. The plant is comprised of a main 49,000cm/day wastewater treatment plant on the

outskirts of the city, 22 individual and for the most part underground pumping stations, and a 250 km

pipeline network to connect properties to the system. Ajman population will be required to pay

connection fees to the company for cost recovery. Two years ago The Emirates of Fujairah awarded to

Tanqia (a local project developer largely owned by Infrastructure Capital Group and Mubadala

Development Company) a $150 million contract to build and operate a sewage treatment plant (STP)

and associated network under a 33-year concession. The Fujairah government, which will be paying the

developer a fee for collecting and treating the wastewater, will be charging the population of Fujairah a

sewage fee. Tanqia appointed a German consortium of Bilfinger & Berger and Passavant-Roediger to

undertake the plant and network construction and will operate the project. Phase I includes a central

STP of 16,000 cm/d built to serve 44,000 residents in the concession area, 16 pumping stations and

installation of a 95 kilometers of network. Phase 2 calls for the secondary network to be extended by 81

kilometers and a further 11 pumping stations. On completion, 72,000, or 90 per cent of the concession

100

http://www.utilities-me.com/article-1059-a-renewable-resource/3/



area's population will be served. A further 8,000 people will be linked to the network during the

subsequent operating period. By 2013, the plant's capacity will be raised by another 8,000 cm/d and by

the same amount again in 2027, effectively doubling the plant's start-up capacity.101 The GCC countries

are investing heavily in TSE. From 2010 to 2016, approximately $60 billion is expected to be spent on

expanding wastewater networks and treatment capacity.102

Agriculture Agriculture accounts for only 3 percent of the UAE's GDP due to the federation's severe climatic

conditions, although it accounts for 20 percent of all water consumed, much from rapidly-depleting

natural water supplies or desalinization projects. The UAE's agricultural sector annually produces about

600,000 tons of produce. Because a high proportion of UAE nationals are employed in fishing and

agriculture, these 2 sectors receive a disproportionate amount of federal and local funding. For political

reasons, the UAE government will continue to encourage agricultural self-sufficiency but it is aware that

this goal is unattainable in either the short-or long-term. Because the UAE protect cereal production,

they inadvertently encourage large volumes of water to be used for low-value production.103

FOA stat for agricultural production in 2008.104

The UAE needs to boost investment in the agriculture sector, which can supply only 37 per cent of its

annual food demand and makes it vulnerable to fluctuating prices. The UAE have sought to lease and

101

DOC: The UAE country report. 102

http://www.utilities-me.com/article-1059-a-renewable-resource/3/ 103

http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/United-Arab-Emirates-AGRICULTURE.html 104

http://faostat.fao.org/


http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/United-Arab-Emirates-AGRICULTURE.html

http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/United-Arab-Emirates-AGRICULTURE.html

http://faostat.fao.org/


buy farmland in developing nations in efforts to improve security of food supplies. “It is extremely

important for the UAE to start encouraging local and global production of food,” said Alaa El-Din

Moussa, a senior economic researcher at Abu Dhabi’s Department of Economic Development (DED).

“It’s no longer a matter of having money, because in the future if there is a huge shortage of food,

securing supplies even if you have money will get harder,”.105

Evaporation and Recharge United Arab Emirates has an arid climate with less than 100 mm/yr average rainfall. The low percentage

of cloudy days and the high solar radiation over the region result in high evaporation rates. The total

annual potential evaporation ranges from 2.5 m in the coastal areas to more than 4.5 m inland.

Estimation of evaporation losses is very important in this region in particular where water ponds or

pools are used for industrial, domestic or agricultural purpose. The UAE is classified as ‘hyper-arid’ in

regards to aridity zoning:

105

http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/business/2010/November/business_November555.xml&section=business




Meteorological factors like wind velocity, air humidity and solar radiation largely affect the evaporation

estimates. The yearly variations in evaporation rates106:

106

csem: Water Evaporation rate in Ras-Al-Khaimah, UAE


Current Projects The most recent water industry development in the UAE is a joint Abu Dhabi Water and Electricity

Authority (ADWEA) and Federal Electricity and Water Authority (FEWA) project to supply electricity to

buildings and shops belonging to citizens in the northern emirates as well as the construction of a 100

kilometer main water pipeline from Kalba, at the southern end of the UAE's East Coast, to Dibba, in the

north, passing through the cities of Fujairah and Khor Fakkan. The project is estimated to cost $245

million, the pipeline will supply 23 million imperial gallons per day (MIGD), to Fujairah, 5 MIGD each to

Khor Fakkan, Dibba and Kalba and 3 MIGD to Dhadnah. The project was instigated by the Abu Dhabi

ruler Sheikh Khalifa bin Zayed Al Nahyan, after he made a trip in February 2011 to the Northern

Emirates. The president also ordered ADWEA to supply FEWA with around 1,300 megawatts (MW) of

power to meet projected demand. ADWEA has sp far constructed two water desalination and power

generation projects in Fujairah at the cost of around $6.0 billion, through joint ventures with companies

from Japan, Singapore and Britain.107

DEWA’s new mega Hassyan power and seawater desalination complex, to be commissioned in 2014,

will have a 1500MW power generation capacity and 120 million imperial gallons per day, or MIGD, of

desalination capacity. DEWA will float a tender in March-April 2011. The Hassyan complex will be

implemented on an independent water and power project basis. The project will help DEWA meet rising

electricity and water requirements in Dubai and, through the involvement of the private sector, reduce

its capital expenditure requirements.108 It has been hinted the Dubai government will soon issue two

decrees that will end DEWA’s monopoly and allow private companies into the industry. DEWA has been

tapping the debt market to raise funds for several of its projects that are under construction to expand

its capacity. In August 2010, the utility commissioned two units of the $250 million power generation

and water desalination plant, M Station, one of the biggest projects with a capacity of 2000 MW and 140

gallons of desalinated water per day. DEWA has seven stations for power generation and water

desalination, while M Station in Jebel Ali comprises 10 gas turbines and eight desalination units.109

ADSSC recently announced the award of two contracts. One contract, a joint venture of the UK's

Biwater Group, Kuwait's Mohamed Abdulmohsin Kharafi & Sons and the local Al-Qudra Holding for two

plants. This group will develop the 300,000-cubic-metre-a-day (cm/d) Al-Wathba plant in Abu Dhabi and

the 65,000-cm/d Al-Saad facility in Al-Ain, under a build-own-operate-transfer contract. A

French/Belgian joint venture of Veolia and Besix has been selected for a further two plants at Al-Wathba

and Al-Saad, with the same capacity. Both groups will take a 40 per cent stake in project companies,

which will then sign 25-year agreements with the government to develop the plants. Abu Dhabi Water &

Electricity Authority will hold the remaining 60 per cent of the project firms indirectly.

107

http://www.gowealthy.com/gowealthy/wcms/en/home/news/economy/New-water-and-electricity-projects-gets-Dh5b.html 108

http://www.khaleejtimes.com/darticlen.asp?xfile=data/business/2011/February/business_February480.xml&section=business 109

http://oilandgasrecruiting.com/article_97.html

http://www.gowealthy.com/gowealthy/wcms/en/home/news/economy/New-water-and-electricity-projects-gets-Dh5b.html

http://www.gowealthy.com/gowealthy/wcms/en/home/news/economy/New-water-and-electricity-projects-gets-Dh5b.html

http://www.khaleejtimes.com/darticlen.asp?xfile=data/business/2011/February/business_February480.xml&section=business

http://www.khaleejtimes.com/darticlen.asp?xfile=data/business/2011/February/business_February480.xml&section=business

http://oilandgasrecruiting.com/article_97.html


Abu Dhabi & Al Ain

Industry

Wastewater

Description

The development of two wastewater treatment plants: a 300,000m3/d plant at Al Wathba in Abu Dhabi,

and a 130,000m3/d facility at Al Hamah in Al Ain. 25-year BOOT. ADWEA will take 60% of the equity of

the project company, while Veolia and Besix will hold equal shares of the remaining 40%.

Status

The banks arranging the debt for the project have put a bridging facility in place. Commercial signing of

the facility took place in December 2009. Construction is scheduled for completion in mid-2011. ADWEA

awarded the contract to a consortium of Veolia AMI and Besix in July 2008.

Client

ADWEA

Developer

Veolia AMI and Besix.

Abu Dhabi, DTS

Industry

Wastewater.

Description

The design and construction of a deep tunnel sewer to upgrade and augment sewage treatment

capacity on Abu Dhabi Island. The program, which in addition to the sewer tunnel also includes

associated works, is expected to take place over the next seven years.

Status

ADSSC received expressions of interest for the engineering, procurement and construction work on 7th

August. Prequalification documents for the deep tunnel works were due to be sent out on 14 August.

The tender for the first tunnelling contract is scheduled to be launched at the end of September. The

contract will involve excavating a 15km tunnel with an internal diameter of five meters. It is expected

that three design-build contracts for the tunnel will be awarded mid-2011.

Client

Abu Dhabi Sewerage Services Company (ADSSC)


Developer

CH2M Hill, MWH Global, and Parsons International.

Abu Dhabi, Saadiyat Island WWTP

Industry

Waste water.

Description

To build the first phase of a 78,000m3/d wastewater treatment plant (WWTP) to serve Saadiyat Island,

the natural island lying 500 meters off Abu Dhabi city. The plant will serve an expected population of

around 150,000. The first phase covers a plant with a daily capacity of 19,500m3/d, a 24,100m3/d

pumping station and a pipeline.

Status

The submission deadline on the tender for the first phase was at the end of October 2010. MBR is the

specified technology. Construction of a smaller STP which will serve the Saadiyat Beach district, the

island’s main resort area, is already underway.

Client

Tourism Development & Investment Company (TDIC)

Developer

TBD

Abu Dhabi, STEP

Industry

Wastewater.

Description

The design and construction of a deep tunnel sewer to upgrade the sewage treatment capacity on Abu

Dhabi Island. The Strategic Tunnel Enhancement Program (STEP), which also includes associated works,

is expected to be realized over the next seven years.

Status

Construction of the full STEP program has been awarded to Italian firm Impregilo, which won all three

stages of the tunneling project. Work will start immediately, and is expected to be completed by 2014.

The first stage involves excavating a 15km tunnel with an internal diameter of five meters.

Client


Abu Dhabi Sewerage Services Company (ADSSC)

Developer

Impregilo

Dubai, Madinat al Arab STP

Industry

Wastewater.

Description

The larger of the two sewage treatment plants (256,024m3/d) to serve Madinat Al Arab, the first phase

of the landmark Dubai Waterfront. A smaller 220,441m3/d STP will serve the Palm Jebel Ali. The project

is structured as 30-year design-build-own-operate project.

Status

An expression of interest for the project was launched at the end of August. Nakheel is currently

focusing attention on the tender of the Jebel Ali sewage treatment plant. A tender for the Madinat al

Arab STP will follow at a later date.

Client

Nakheel

Developer

TBD

Fujairah

Industry

Wastewater.

Description

Improve the quality of sewerage services by replacing existing truck-based arrangements with an

integrated system dealing with liquid and solid waste. Offered as 33-year concession.

Status

The project has achieved financial close and a groundbreaking ceremony was held on 10 May 2010.

Client

Fujairah Water and Electricity company


Developer

TBD

Mirfa

Industry

Desalinization etc.

Description

Privatization and extension of the Mirfa power and desalination complex in Abu Dhabi. The plant was

commissioned in 1995/96 and has four 48MW gas turbines and three 5.4MIGD desalination units. In

2000, Italimpianti won a contract to install an additional 22.5MIGD of capacity. IWPP; under the model

used in Abu Dhabi to date, the winning bidder takes a 40% stake in a project company which will

implement the scheme.

Status

Although contract was awarded in 2000, the project was still in a pre-feasibility stadium as of late 2010.

However, the project is not likely to include an extension of the facility’s water capacity. Fichtner

(technical), HSBC (financial) and White & Case (legal) are advising the Abu Dhabi Water & Electricty

Authority (ADWEA).

Client

ADWEA

Developer

Italimpianti

Palm Jebel Ali

Industry

Desalinization etc.

Description

A new 220,441m3/d STP will serve the Palm Jebel Ali, the second of Dubai developer Nakheel’s Palm

islands. Structured as 30-year design-build-operate (DBO).

Status

As of November 2010, two of the three shortlisted consortia – Metito with Berlinwasser, and YTL Berhad

with Wessex Water and Hitachi – have withdrawn from the bidding process. The final shortlisted

consortium comprises MMC Berhad with Gold Star and GE.


Client

Nakheel

Developer

TDB


Government Water Sector Organizations The UAE’s water sector is organized along federal lines. Abu Dhabi Water & Electricity Authority

(ADWEA) is the utility responsible for the supply of water in Abu Dhabi. In Dubai, Dubai Electricity &

Water Authority (DEWA) operates the water and electricity sector. Sharjah Electricity & Water Authority

(SEWA) is the authority with responsibility for the small emirates water and power supply. For the four

northern emirates – Ajman, Fujairah, Ras al-Khaimah and Umm al-Quwain, a single authority, the

Federal Electricity & Water Authority (FEWA), is the water and power provider.

ADWEA has been the most active promoter of privatized water provision, with a series of independent

water projects (IWPPs); ADWEA has built at least one new IWPP every year, besides expanding facilities.

The recent financial crisis and weak economic conditions have decreased demand and credit lines. Dubai

was hit hardest by the global economic downturn and the clutch of real estate developers that drove the

expansion of the states mega projects are now delaying, scrapping or downsizing their various schemes.

DEWA has announced plans to invest more than $16 billion over the next five years to boost its power

and water capacities. In 2009 DEWA successfully closed a US$1bn export credit agency (ECA)-backed

financing facility in support of its ongoing capital expansion. Despite Abu Dhabi’s successful deployment

of private-led development models, Dubai, Sharjah and the northern emirates have yet to adopt a full

scale IWPP template. Dubai’s credit crunch has resulted in the three major credit agencies downgrading

the DEWA due to uncertainty over the Dubai government’s ability to support state-linked companies.

This has forced the DEWA to find credit from non-government sources because it needs to continue to

expand its services to a power customer base that increased by 13.5% last year. Therefore, the DEWA is

looking for private investors to help expand its infrastructure with its increasing demand. This has

proven to be much harder than anticipated as the DEWA’s first experiment to use a private operator to

meet its growing power needs has failed to generate sufficient funds to build a desalination utility

complex in Hassyan, Jebel Ali. The desalination plant was intended to have a total capacity of 9,000 MW

of power and 600 million gallons of water a day. Two companies, Iberdrola and Fisia Italimpianti, have

already given bids towards funding the project but sources close to the project indicate that it is unlikely

that the project will get the green light to proceed, given the fact that the prices of construction are too

high and the bids were insufficient to cover the costs. However, despite the short term challenges,

which will see the rate of water production increase slower than anticipated, the rate of capacity should

increase in the longer-term as demand begins to rise again, along with investment levels.

Abu Dhabi Water & Electricity Authority (ADWEA)

ADWEA produces, transmits and distributes potable water, electricity and sewerage services throughout

the Emirate of Abu Dhabi. It is a national organization wholly owned by

the Abu Dhabi Government, maintaining a separate legal entity, as well

as complete financial and administrative independence. ADWEA is split

into four directorates; Planning and Development Directorate, Business

Support Directorate, Privatization Directorate, and Projects Directorate,

each one operates under certain basic responsibilities. The board works

alongside its wholly owned private subsidiaries, which are involved in


different activities in the water and electricity sector in the Emirate of Abu Dhabi. ADWEA is responsible

for implementing government policy regarding water and electricity sector in the Emirate, including the

ongoing privatization of the water and electricity sector in order to use water and energy resources

more efficient. Abu Dhabi Water and Electricity Authority supplies electricity and potable water to a

population of more than 1.5 million in the emirate of Abu Dhabi, over an area of 67340 sq. km. ADWEA

and its subsidiaries anticipate possessing a leading position in the Gulf competing with pioneers involved

in the water, electricity and sewerage sector worldwide. Ongoing efforts towards emiratization will

continue by means of sponsoring students and recruiting Emirate graduates in various positions.

ADWEA has been implementing a successful privatization program since its inception in 1998. Since

then, nine projects have been implemented reaching a production of 823 Million Imperial Gallons of

water daily and 13,427 megawatts, and thus turning the Emirate of Abu Dhabi to be the only self-

sufficient city in the Middle East, facing no lack of energy or water, furthermore, providing certain

production capacities to the Northern Emirates in the United Arab Emirates.110

ADWEA manages the affairs of following wholly-owned subsidiaries responsible for different activities

in the water and electricity sector:

Al Mirfa Power Company (AMPC)

Abu Dhabi Water and Electricity Company (ADWEC)

Abu Dhabi Transmission and Dispatch Company (TRANSCO)

Abu Dhabi Distribution Company (ADDC)

Al Ain Distribution Company (AADC)

At present, ADWEA holds 60 per cent of equities in the following Independent Water and Power

Produces (IWPPs):

Emirates CMS Power Company (ECPC)

Gulf Total Tractebel Power Company (GTTPC)

Shuweihat CMS International Power Company (SCIPCO)

Arabian Power Company (APC)

Taweelah Asia Power Company (TAPCO)

Emirates Semcorp Water & Power Company (ESWPC)

Fujerah Asia Power Company (FAPC)

110





Shuweihat

Web page: http://www.adwea.ae/eng/index.html

Dubai Electricity & Water Authority (DEWA)

The Dubai Electricity and Water Authority (DEWA) was formed on 1 January, 1992, by a decree issued by

Ruler Sheikh Maktoum bin Rashid Al Maktoum to

take over and merge the Dubai Electric Company

and the Dubai Water Department that had been

operating independently for several years until

then. Both these organizations were established

in 1959. Today DEWA employs a workforce of about 7,500 employees. The company is expanding in

order to meet the ever growing demand for electricity and water. Recently the DEWA has been

partnering with private companies to assist in providing funds for its projects.

Web page: http://www.dewa.gov.ae/default.aspx

Sharjah Electricity & Water Authority (SEWA)

The SEWA ownership was transferred from the private sector (Electricity & Water Supply Company) to

the Government of Sharjah and it was

renamed Sharjah Electricity & Water Authority

(SEWA). It is a public body enjoying a financial

and administrative independence providing

services of electricity, water and natural gas to the residents of Sharjah Emirate. Its involvement in

water includes develops the production of drinking water production and supply for its consumers and

increasing demands, as well as planning and implementing expansions in future water projects.

Web page: http://www.sewa.gov.ae/English/default.asp

Federal Electricity & Water Authority (FEWA)

The Federal Electricity and Water Authority (FEWA) is the body responsible for overseeing federal water

and power utilities in the Northern Emirates.

FEWA focuses on enhancing the infrastructure,

which for obvious reasons are not at the same

standard as in Dubai and Abu Dhabi. Large efforts

are also being made by FEWA to promote water conservation.

Web page: http://www.fewa.gov.ae/index_en.html

Emirates’ National Grid (ENG)

The ENG project was launched by the UAE Ministry of Energy in 2001 with the purpose of enhancing

integration between the various electricity and water authorities in the UAE, each of which contributed

http://www.adwea.ae/eng/index.html

http://www.dewa.gov.ae/default.aspx

http://www.sewa.gov.ae/English/default.asp

http://www.fewa.gov.ae/index_en.html


proportionately to the capital investment required to build the ENG. Current and future trade in power

between emirates is made possible by the Emirates National Grid. The ENG-project has the following

funding and shareholder stake distribution:

ADWEA share of 40%

DEWA share of 30%

FEWA share of 20%

SEWA share of 10%

The Project is managed and supervised by the Ministry of Energy in Dubai; the project is supervised by

the “Higher Committee”, chaired by the Minister Energy, and attended by Chairmen/Managing Directors

of the four Authorities. The project has strong support of the four Authorities involved as power

shortage is a big problem in the UAE.


Government Influence The UAE is making considerable technical, policy, and institutional progress within the water sector. The

UAE is home to some of the best hydraulic engineers in the world; managing sophisticated irrigation and

drainage systems, and spearheading advances in desalination technology. Policies have shifted from

direct provision of water supply services to regulation of services provided by independent or privately

owned utilities. To implement the new policies, most governments in the GCC have established

ministries that manage water resources and have staffed them with well-trained and dedicated

professionals.

Three significant factors influencing policies are:

Influential lobby groups that were indifferent or opposed to water reforms have started to

support them. For example, groups of irrigated farmers see opportunities for growing high-value

crops for export, but they can only benefit from these opportunities if water services improve.

New interest groups have formed. These include environmental organizations, businesses

associated with tourism, and communities concerned about the health damage from bad water

quality.

Economic and finance ministries are being confronted with the rising costs of rehabilitating and

maintaining such large infrastructure networks and are becoming more aware of the forgone

opportunities when the infrastructure is not used well or maintained properly. A more holistic

view of the entire water cycle has highlighted the total costs associated with water

management.111

The first UAE water conservation legislation was introduced in 2009. Previously the regulatory statutes

associated with water were handled on Emirate level.112

111

The World Bank: Making the Most of Scarcity- Accountability for Better Water Management Results in MENA 112

http://www.arabianbusiness.com/new-water-conservation-law-for-uae-43871.html

http://www.arabianbusiness.com/new-water-conservation-law-for-uae-43871.html


UAE Water Companies All of the major UAE water companies are indirectly owned by their respective Emirate’s government.

Some smaller players in the markets exist as well.

Abu Dhabi Water and Electricity Company (ADWEC)

The Abu Dhabi Water and Electricity Company (ADWEC) is a wholly

owned subsidiary of the Abu Dhabi Water and Electricity Authority

(ADWEA). ADWEC was established on 1/1/1999. The key role of the

company is to act as a guarantor of the security of supply of electricity

and water to consumers in the Emirate of Abu Dhabi. ADWEC is the

single Buyer and Seller of electricity and water within the Emirate of Abu

Dhabi. ADWEC procurers water and electricity from the Power and

Water Producers on the basis of long term Power and Water Purchase

Agreements (PWPA's) and sells it through Bulk Supply Tariffs (BST) sales agreement with the Distribution

Companies (DISCO's). It is also responsible for preparing the long-term Demand Forecasts for electricity

and water, purchasing of gas fuel, contracting for new capacity and financial settlements.


U.S. Companies Engaged in the UAE Water Sector Pentair Water Company

Pentair Water Middle East

No. 404, Al Buhaira Building

Corniche Street, P.O. Box: 32789

Al Buhaira - Al Majaz - Sharjah, Dubai United Arab Emirates

+971 (0)6 572 0552

Website: www.pentair.com

Siemens Water

Siemens LLX

Al Otaiba Tower, Level 15

Sheikh Zayed 2nd Street

Post Office Box 47015

Abu Dhabi, UAE

Telephone:

+971 (2) 63 93 666

Website: www.usa.siemens.com

http://www.pentair.com/

http://www.usa.siemens.com/


Foreign Companies Engaged in the UAE Water Sector Many other foreign companies and local companies are operating in the UAE water market as project

investors. Notable Companies include:

GDF Suez Energy, involved in the Shuweihat 2 IWPP and the Fujairah 2 IWPP

www.gdfsuez.com

Fisia Italimpianti, involved in the Jebel Ali Desalination Plant and the Hamriyah Desalination Plant.

www.fisiait.com

Veolia Water, involved in the Ajman Desalination Plant and the Reem Island Sewage Treatment plant.

www.veoliawater-middle-east.com

Mubudala Company, involved in the Fujairah Sewage Treatment Plant, Barka IWPP, and the Power

Island Water Project.

www.mubadala.ae

Marubeni Corporation, involved in the Shuweihat IWPP, Al Saad/ Alwathba Wasterwater Treatment

Plants, and the Taweelah IWPP Water Projects.

www.marubeni.com

http://www.gdfsuez.com/

http://www.fisiait.com/

http://www.veoliawater-middle-east.com/

http://www.mubadala.ae/

http://www.marubeni.com/


Further Contacts and Information UAE Ministry of Foreign Trade- Washington D.C.

Embassy of the United Arab Emirates

3522 International Court, NW

Suite 400

Washington, DC, 20008

Phone (202) 243-2400

Fax: (202) 243-2432

Trade Office email: [email protected]

UAE Ministry of Environment & Water

Abu Dhabi

P.O Box:213

Telephone: 4495100-02-00971

Fax: 4495150-02-00971

Website: www.moew.gov.ae


UAE-US Business Council

U.S.-UAE Business Council

505 Ninth Street, NW

Suite 5010

Washington DC 20004


Telephone: +1.202.863.7285

Arab Water Academy (AWA)

PO Box 45553


Abu Dhabi

United Arab Emirates


Telephone: +971 (2) 693-4742

Website : www.awacademy.ae

Abu Dhabi National Energy Company (ADEC)

Abu Dhabi National Energy Company PJSC

P.O. Box: 55224

Abu Dhabi, UAE


Telephone: +971 (2) 691 4900

Website : www.taqa.ae

Regulation & Supervision Bureau- Abu Dhabi

Regulation & Supervision Bureau

P.O. Box 32800, Abu Dhabi,

UAE


Water & Wastewater Email: [email protected]

Telephone: +971 (2) 4439333

Website : www.taqa.ae

http://www.taqa.ae/


Resources


PennWell Corporation, Oil & Gas Journal, Vol. 105.48 (December 24, 2007)


Economist Intelligence Unit, United Arab Emirates Country Report February 2011.






http://www.forbes.com/2009/06/17/monarchs-wealth-scandal-business-billionaires-richest-

royals.html





Mohsin S. Khan: The GCC Monetary Union: Choice of Exchange Rate Regime



http://www.portfolio.com/news-markets/international-news/portfolio/2008/08/13/US-Trades-

With-Iran-Via-Dubai/


www.abudhabiairport.ae





http://www.bloomberg.com/news/2010-10-14/u-a-e-2011-growth-forecast-cut-to-2-9-at-efg-

hermes-on-slower-spending.html

http://www.forexexaminer.com/currency-peg-blamed-for-uae-unrest-financial-timesforex-

news/


http://www.meed.com/sectors/economy/government/special-report-gcc-euro-crisis-has-

lessons-for-planned-gcc-currency-union/3007700.article


Luxemburg Ministry of the Economy and Foreign Trade: Market Entry Guide to the UAE.



http://online.wsj.com/article/SB10001424052748703408604576164703521850100.html?KEYW

ORDS=dubai



















http://www.abudhabiairport.ae/




















Reem M. Albuainain: Unemployment Rate In the UAE: The case of Abu Dhabi




www.uae-embassy.org





http://unstats.un.org/unsd/servicetrade/


http://gulfnews.com/news/gulf/uae/general/mind-your-language-behaviour-and-dress-in-the-

uae-1.118951




http://gulfnews.com/news/gulf/uae/general/mind-your-language-behaviour-and-dress-in-the-

uae-1.118951

http://gulfnews.com/news/gulf/uae/general/dubai-police-chief-promises-zero-tolerance-on-

corruption-1.523573




Terry Carter, Lara Dunston: Dubai





http://www.english.globalarabnetwork.com/200910123115/Related-news-from-UAE/uae-sees-

first-imprisonment-for-parallel-imports-in-the-middle-east.html

http://www.globaltrade.net/international-trade-import-exports/f/business/text/United-Arab-

Emirates/Legal-and-Compliance-Labeling-and-Marking-Requirements-in-U.A.E.html






http://www.clydeco.com/knowledge/articles/litigation-and-dispute-resolution-in-the-uae-

better-the-devil-you-know-not-always.cfm

http://www.khaleejtimes.com/






http://www.uae-embassy.org/





http://unstats.un.org/unsd/servicetrade/dqBasicQueryResults.aspx?px=EB&cc=982,200,981,245,249,253,247,260,262,263,264,268,269,271,273,272,275,276,277,258&r=784&y=2008




























http://www.khaleejtimes.com/

trade information package and water industry outlook - the united arab emirates (uae) 2011

Documents